Preamble

The House met at half-past Two o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

PRIVATE BUSINESS

LONDON DOCKLANDS RAILWAY BILL

STANDARD CHARTERED BANK BILL

Lords amendments agreed to.

CORNWALL COUNTY COUNCIL BILL [Lords] (By Order)

Order for consideration, as amended, read.

To be considered upon Thursday 12 April.

Oral Answers to Questions — DEFENCE

Space Defence System

Mr. David Atkinson: asked the Secretary of State for Defence what consultations he has had with his United States counterpart on space defence systems.

The Secretary of State for Defence (Mr. Michael Heseltine): I enjoy satisfactory and frequent consultations with Mr. Weinberger on all matters of common defence interest, including space.

Mr. Atkinson: Given Britain's knowledge and expertise in satellite technology, is there not here an opportunity for the closest possible collaboration with the United States on anti-satellite and anti-missile technology from the point of view of space defence systems?

Mr. Heseltine: My hon. Friend will appreciate that our speciality is much more in communication satellites than in any other activity. It is important to remember that at this stage the Americans are considering a very long-term research programme. It is, therefore, much too early to anticipate any possible developments that could come at a later stage.

Mr. Strang: Do the British Government support President Reagan's decision to develop the capability to fight a nuclear war in space?

Mr. Heseltine: The President is considering the possibilities of ensuring that there are no threats to the United States or its allies from space developments. It is a long-term research project and it is understandable, given the capability of the Soviet Union, that he should undertake such a research consideration.

Mr. Michael Marshall: Whatever consultations may proceed with the United States, particularly in the context of NASA and perhaps in relation to civil applications spreading to military use, may I ask my right hon. Friend

whether he agrees that the European option might also be explored, because we may want to consider a situation which is simply not left to the Russians and the Americans?

Mr. Heseltine: My hon. Friend is as aware as I am of the history of European collaboration on space projects. I believe that there is an argument for continuing to keep in close touch on these matters through the European Space Agency.

Mr. McNamara: Rather than supporting the United States President's policy of research into space systems, should not Her Majesty's Government be urging the United States to have discussions with the Soviet Union to prevent a further escalation of the arms race in space?

Mr. Heseltine: The hon. Gentleman is as aware as I am that the United States is pursuing the opportunities for arms control in a whole range of forums, and we support that. But in this instance, where it is considering a research programme, it has made it clear that at this stage it does not see any means of verification.

Equipment Expenditure

Mr. Cyril D. Townsend: asked the Secretary of State for Defence what percentage of United Kingdom defence equipment expenditure is spent in the United Kingdom; and how many jobs are supported both directly and indirectly in British industry as a result of that expenditure.

The Minister of State for Defence Procurement (Mr. Geoffrey Pattie): In recent years national contracts placed with United Kingdom industry plus our share of collaborative projects have amounted to almost 95 per cent. of defence equipment expenditure. The remaining 5 per cent. is spent on contracts placed overseas. We estimate that for 1982–83, the latest year for which figures are available, this expenditure sustained about 225,000 jobs directly and a further 180,000 indirectly in British industry.

Mr. Townsend: I thank my hon. Friend for those important and significant figures. Will he confirm that about 10,000 firms have contracts of some form with the Ministry of Defence? Is there not some obligation on those hon. Members who wish our defence expenditure to be in line with that of our NATO allies to explain to the British people the job losses that would result from such a policy?

Mr. Pattie: The number of companies that my hon. Friend mentioned is right. He is also right to draw the attention of the House to the job losses that would follow from the type of defence policy that was enunciated by the Labour party during the election.

Mr. Douglas: On defence expenditure and British industry, will the Minister consider persuading his right hon. Friend the Secretary of State to make a statement in the House about the peregrinations of Mr. Levene, who is acting like an Avon lady knocking at the doors of British industry and hawking the royal dockyards? The Secretary of State should make a statement to the House rather than use the subterfuge on which he is presently embarking.

Mr. Pattie: My right hon. Friend will have heard what the hon. Gentleman said and will judge the right moment to make any statement on the royal dockyards and Mr. Levene's involvement.

Mr. Viggers: Does my hon. Friend agree that industrial arguments are important, but that basically, when the chips are down, the most important argument is that our armed forces should have the right kit?

Mr. Pattie: Yes.

Mr. Ashdown: Will the Minister hazard a guess as to how many of the jobs that he has mentioned depend on European collaboration projects, such as the EH101 and MRCA? Does he agree that the future of our defence industry will depend largely on expanding that European collaboration even further?

Mr. Pattie: The estimate we have given is that about 15 per cent. of the 95 per cent. of defence equipment expenditure goes on collaborative programmes. I think that that should give the hon. Gentleman the answer he wants.

Mr. Farr: What proportion of the content of Trident will be co-produced, excluding the submarines, which are the launching vehicles?

Mr. Pattie: As my hon. Friend knows, 55 per cent. of the Trident programme will be produced in the United Kingdom. That includes the submarine, the warhead for the missile, the fire control system and various other advanced systems in the submarine.

Mr. Denzil Davies: Apparently, Mr. Levene is an adviser to the Secretary of State.

Mr. Heseltine: indicated assent.

Mr. Davies: I am glad to see that confirmed. Is there not a clear conflict of interest between Mr. Levene's position as chairman of a working party that is looking into the defence procurement and as a former chairman of the Defence Manufacturers Association and managing director of a major arms manufacturing company?

Mr. Pattie: No. The right hon. Gentleman should know that Mr. Levene is not a former chairman, but a deputy chairman of the Defence Manufacturers Association. His position has been regularised, confirmed and agreed with the National Defence Industries Council, which met earlier this year. If that council sees no conflict of interest, it is not likely that there is one.

Mr. Denzil Davies: rose—

Mr. Speaker: Order. I cannot allow a second question on this subject.

US Ships (Cruise Missiles)

Mr. Andrew F. Bennett: asked the Secretary of State for Defence if he will ensure that there will be added security measures in those British ports to be visited by United States ships carrying sea-launched cruise missiles.

Mr. Roy Hughes: asked the Secretary of State for Defence if he will ensure that there will be added security measures in those British ports to be visited by United States ships carrying sea-launched cruise missiles.

The Minister of State for the Armed Forces (Mr. John Stanley): Appropriate security arrangements are made for the visits of foreign warships to United Kingdom ports.

Mr. Bennett: Does the Minister accept that there is widespread anxiety about siting cruise missiles over much of southern England and the possibility that they will be

placed in our territorial waters and will bring visiting American ships to our ports? Will the Government now pursue negotiations to put these weapons out of existence with as much enthusiasm as they have shown in spreading them throughout the whole of the British Isles and its seas?

Mr. Stanley: I do not recognise the concern to which the hon. Gentleman referred, but I would remind him that the zero option is on the table and can be picked up by the Soviet Union at any time. It was the Soviet Union that walked out of the INF negotiations.

Mr. Roy Hughes: Will the Minister explain the significance of the increase in the number of these visits? Would it not be far wiser for this country to rely on conventional defences? People would then be able to sleep more peacefully in their beds at night.

Mr. Stanley: It is because the Government attach great importance to improving the capabilities of our conventional forces that we have substantially increased the defence budget in real terms, in stark contrast to the manifesto on which the Labour party fought the general election.

Mr. D. E. Thomas: In a previous answer the Minister told me that sea-launched cruise missiles posed similar problems for verification as many existing dual capability weapons. Will he name one existing dual capability strategic missile?

Mr. Stanley: The hon. Gentleman will be aware of the major programme that is taking place within the Soviet Union for developing long-range air-launched, sea-launched and ground-launched cruise missiles. Our view is that these long-range cruise missile systems will all be capable of carrying conventional warheads.

Mr. Denzil Davies: Is it envisaged that American ships carrying cruise missiles with nuclear warheads will call at British ports? If so, are those ships part of the United States strategic defences, or assigned to NATO?

Mr. Stanley: The United States has made it clear that these missiles are part of the strategic deterrence. If requests are made to visit British ports, they will be dealt with in the normal way.

Northern Ireland

Dr. Mawhinney: asked the Secretary of State for Defence how many service men have died in Northern Ireland each year since 1979 and in total since 1968.

Mr. Stanley: The numbers of service men killed in Northern Ireland as a result of terrorist action is as follows: 1979, 48; 1980, 17; 1981, 23; 1982, 28; 1983, 15; 1984, six to date. The total killed since 1968 is 514.

Dr. Mawhinney: I know that my hon. Friend will agree that those are tragic figures. Bearing in mind the recently expressed concern of our right hon. Friend the Secretary of State for Northern Ireland about cross-border security, will my hon. Friend or my right hon. Friend have discussions with their counterparts in Dublin to try to initiate direct Army-to-Army communications across the border with a view to reducing the risk to our security forces on the border and the need for incursions across the border?

Mr. Stanley: I agree with my hon. Friend about the tragic nature of the figures that I have given to the House.
Cross-border security is dealt with by the civil authorities. The Army has no involvement in any cross-border operations. That remains the position.

Mr. J. Enoch Powell: Will the Minister be careful to take no notice whatsoever of what was said by his hon. Friend the Member for Peterborough (Dr. Mawhinney)?

Mr. Stanley: I note what the right hon. Gentleman says, but I am not necessarily inclined to agree with him.

Sir John Biggs-Davison: Does my hon. Friend include in those figures the sacrifice made by the Ulster Defence Regiment? Will he pay a tribute to its part-time members, who live under special risk?

Mr. Stanley: I am grateful to my hon. Friend. The 514 service men killed since 1968 are made up of 373 regular service men and 141 members of the UDR, of which a significant 117 were killed off duty. I definitely join him in expressing my tribute, and that of the whole House, to the bravery of the members of the UDR.

Mr. McNamara: The whole House will regret the deaths of British service men in Northern Ireland, but has the Minister or his Department any reason to complain of lack of co-operation from the Irish Army or the Garda Siochana? Can he state categorically that no covert operations by any British forces under the control of his Department are taking place within the Republic of Ireland?

Mr. Stanley: I can give the hon. Gentleman the assurance sought in the second part of his question. Our view is that the wider co-operation, to which he referred, is satisfactory.

Greenham Common

Mr. Ron Brown: asked the Secretary of State for Defence if he will make a statement about the current security situation at Greenham common.

Mr. Clay: asked the Secretary of State for Defence if he will make a statement about the current security situation at Greenham common.

Mr. Stanley: On the security situation at Greenham common, I have nothing to add to the reply I gave to my hon. Friend the Member for Berkshire, East (Mr. MacKay) on 17 January, at columns 152–53. The training of the personnel stationed there in their various operational roles continues both on and off base.

Mr. Brown: Is it not evident that the peace women have not been defeated and that, judging by last night's events, they should be congratulated? Of course, there is another point. Which authorities, if any, have agreed to chariots of death being trundled around their counties, or is this an academic matter? Does local democracy not mean much today? It seems that the Government are not interested in democracy.

Mr. Stanley: I assure the hon. Gentleman that the off base training continues and will continue for as long as the cruise missiles are there.

Mr. Clay: As the Government's latest repressive little ploy to close down protest at Greenham has evidently failed and as deployments outside the base are still nocturnal and very brief, do the Government think that the

United States will ever be able fully to deploy these missiles outside the base without imprisoning the entire peace movement in Britain?

Mr. Stanley: I assure the hon. Gentleman that off base training has started well and, I am sure, will continue equally well.

Mr. McQuarrie: Now that we have now got rid of most of the Greenham common women, due to the Department of Transport getting authority to take over the land, will my hon. Friend ensure that the security fences are made stronger to prevent the women getting through or jumping over them and creating problems within the base?

Mr. Stanley: I shall not comment on the athleticism of the ladies. I assure my hon. Friend that the degree of security of the various fences increases as one gets closer to the actual ground-launched cruise missile site. In our view it would not be a cost-effective use of defence resources to create a massively expensive Berlin wall-type fence around the outer perimeter.

Mr. Stokes: Does my hon. Friend agree that most reasonable people are delighted that the women are being removed? Does not the whole episode show what a wonderfully tolerant country this is?

Mr. Stanley: I agree entirely with my hon. Friend. I think that the treatment of the Greenham women by the civil authorities is the most eloquent testimony of the contrast between this country and the Soviet Union.

Mr. Skinner: Is not the truth of the matter that it is the Americans who are the real decision-makers in Britain? Is it not a sad state of affairs, related to security at Greenham, that the Government have now allowed the Americans in the Pentagon to decide where Britain's bypasses and road widening schemes will be built so that they can get rid of these women?

Mr. Stanlby: I assure the hon. Gentleman that the British Government retain complete control over the execution of all highway works in this country.

NATO (Defence Strategy)

Mr. Norman Atkinson: asked the Secretary of State for Defence what recent discussions he has had about proposals for changes in the North Atlantic Treaty Organisation defence strategy.

Mr. Heseltine: None. The United Kingdom remains fully committed to NATO's strategy of flexible response and forward defence.

Mr. Atkinson: Is that not rather surprising, as both the United States and the Soviet Union now agree that a nuclear first strike would in no way pre-empt the retaliatory capability of the opposition? Therefore, why does Britain still hang on to the idea that we must retain a first strike strategy?

Mr. Heseltine: I do not think that the hon. Gentleman is up to date. To the best of my knowledge, there has never been any assumption by any Government that we needed to have a first strike capability. What we need— and what all Governments have ensured that we have—is a deterrent capability; and that has kept the peace for nearly 40 years.

Mr. Stern: In discussions with his counterparts in NATO, will my right hon. Friend stress the importance of individual countries in NATO, particularly Britain, retaining the capability to advance and improve the manufacture of essential items of defence equipment?

Mr. Heseltine: I am grateful to my hon. Friend for his question, because it enables me to stress the closeness of the political dialogue with my colleagues in Europe on this matter. We are all seeking to find a way of getting better value for money for our defence programmes. We perceive that co-operation is a route that we should follow, provided that no one expects any of us to sacrifice our immediate national interests.

Mr. Duffy: Is the Secretary of State aware of the growing interest in improving conventional defence, arising out of concern over NATO's reliance on early first use of nuclear weapons in the event of conflict? Therefore, why does he not show more public awareness of the dramatic new possibilities that emerging technology is opening up for non-nuclear defence?

Mr. Heseltine: There is no way of showing our concern more than by the increase in real terms of nearly 25 per cent. in the defence budget under this Government, which has enabled us to afford the sorts of weapon systems to which the hon. Gentleman draws the attention of the House.

Mr. Adley: Would my hon. Friend care to speculate, in terms of jobs and security, on the appalling consequences of implementing Labour party policy, which appears to be in favour of canonising pacifist gipsies and dismantling NATO?

Mr. Heseltine: My last calculations, which were conducted in a pre-election climate, showed that to carry through the policies of the Labour manifesto would have eliminated the whole of the Royal Navy.

Mr. Cartwright: What consideration is the Secretary of State giving to the possible use of emerging technology as a means of reducing NATO's dependence on battlefield nuclear systems?

Mr. Heseltine: All these matters are central to the discussions that we are having about the development of new weapon systems. In recent years we have always been faced with the need to introduce the latest technological advance into our weapon systems, and that position is not changing.

Mr. Denzil Davies: Will the Secretary of State tell us something about the air-land battle concept, which apparently now finds favour with United States forces? Has that been discussed in NATO? Is air-land battle totally dependent on conventional weapons, or is it part of a mix of conventional, chemical and nuclear weapons?

Mr. Heseltine: All these new concepts, whether the air-land battle or the other concepts associated with emerging technologies, are the subject of discussions within NATO, but it would be fair to say that they have not yet been adopted as NATO strategy.

Defence Expenditure

Mr. Parry: asked the Secretary of State for Defence what recent representations he has received concerning defence expenditure.

Mr. Heseltine: I frequently receive representations on several aspects of defence spending.

Mr. Parry: The spending of billions of pounds on nuclear weapons of death and destruction is to be deprecated while we are closing hospitals and slashing services for the sick and disabled. Is not the sum of £30 million which the Liverpool city council is rightly reclaiming from the Government to defend jobs and services——

Mr. Speaker: Order. The hon. Gentleman is not relating his question to defence expenditure.

Mr. Parry: What I am saying is that it is peanuts compared with the £17,000 million spent on defence.

Mr. Heseltine: The first priority of every Government must be the defence of the nation. It is important that the hon. Gentleman should remind his constituents that in 1984–85 more money will be spent on health and personal social services than on defence, and that social security spending will be over twice that of the defence budget.

Mr. Churchill: Would my right hon. Friend be able to provide a very small amount from the defence budget this summer to enable a representation to be made by ships of the Royal Navy at this year's 40th anniversary celebrations of the D-Day landings, especially bearing in mind that Her Majesty the Queen will be attending those celebrations?

Mr. Heseltine: I am grateful to my hon. Friend for enabling me to say that we have considered that matter within the Ministry in terms of a general application to our armed services. I hope that I shall be able to respond favourably to his idea.

Mr. Sheerman: Has the Secretary of State evidence of savings in defence costs arising from transporting British troops by public transport, especially by the North sea ferries? Is he aware that the mass transportation of troops on civilian carriers is causing great distress to civilian passengers? Is he further aware that a large number of my constituents were terrorised by British Army troops on the Norland last Thursday?

Mr. Speaker: Order. That is miles wide of the question.

Mr. Terlezki: Is the Secretary of State aware of the total defence expenditure of the Soviet Union and other Warsaw pact countries? How does it compare with United Kingdom spending?

Mr. Heseltine: My hon. Friend will appreciate the difficulty of extracting precise information from the accounts of the Soviet Union, but he will be fully aware that as a proportion of its national output it spends greatly in excess of what we spend.

Mr. Denzil Davies: Are not the costs of Trident estimated at £1 billion a year, which makes a total of £2 billion since the Secretary of State held office? Is not half of that cost totally outside his control and at the mercy either of international exchanges or American arms manufacturers? Is it not a fact that in a few years' time the Secretary of State will have to make further substantial cuts in conventional defences to pay for Trident?

Mr. Heseltine: I do not think that we shall need to do that. We expect the dollar spend to remain in the order of


45 per cent., and that Trident, as a percentage of the increased defence budget, will average 3 per cent., and in peak years, perhaps 6 per cent.

Youth Training Scheme

Sir William van Straubenzee: asked the Secretary of State for Defence whether more recruits are now joining the armed forces youth training scheme and its civilian counterpart.

The Parliamentary Under-Secretary of State for Defence Procurement (Mr. John Lee): Recruits are continuing to join the armed services youth training scheme, and last month some 50 trainees joined the scheme, making more than 650 in total.
With regard to our civilian scheme, I am pleased to say that there are signs that the number of young people wishing to join the scheme is increasing, and about 170 of the 250 training places available are filled.

Sir William van Straubenzee: I thank my hon. Friend for the encouragement in the second half of his reply. Bearing in mind the value of the armed forces YTS, has he fresh ideas to increase the numbers of those taking part?

Mr. Lee: I am grateful to my hon. Friend for his interest. We are continuing actively to promote schemes, through recruiting officers, newspaper articles, local radio and television. In many ways the youngsters on the schemes are themselves the best possible ambassadors.

Mr. Greenway: How many of those on the armed services YTS might be recruited into the services permanently if they so wish?

Mr. Lee: Few of those on the armed services YTS have moved to our regular forces. Obviously, at the end of the year youngsters on the scheme must compete with civilians, but they have an advantage.

Mr. Evans: Is it not time for the Minister to admit that the scheme is a disastrous flop and scrap it?

Mr. Lee: It is certainly not a disaster. More than 3,000 youngsters applied, of whom 2,387 were rejected because they did not meet the high standards that we demand. About 660 youngsters are at present on the armed forces scheme and 170 are on the civilian scheme.

Cruise Missiles

Mr. Latham: asked the Secretary of State for Defence whether he will make a statement on the progress of the operational deployment of cruise missiles.

Mr. Stanley: NATO deployments of cruise and Pershing II missiles are due to be completed over a five-year period. The programme for the deployment of 96 ground-launched cruise missiles at Greenham common will be completed well within that period, but I am not able to discuss specific details of further deliveries.

Mr. Latham: Is it not highly regrettable that the Soviets are still not prepared to return to the negotiating table to prevent the further deployment, either of these dreadful weapons or of SS20s? Will my hon. Friend confirm that, if the Soviets showed any good will, an agreement could be reached?

Mr. Stanley: I can certainly give my hon. Friend that assurance. As I said in answer to a previous question, the zero option remains on the table, as does President

Reagan's offer of an agreement on equal numbers at a level below the present deployments. As for the SS20s, it is a matter of great regret that not only have the Soviets moved out of the INF negotiations, but that the deployment of SS20s, both those facing westwards and those facing eastwards, continues.

Mr. Flannery: Is it not a fact that the deployment of these dreadful missiles is meeting such resistance from the British people that they have to be moved at night and only a few missiles have arrived here, although about 170 are due to come?
Is it not also a fact that, although there are 105 American bases in this country, the British people virtually never see an American in uniform outside those bases because the Americans are so unpopular in this country? Will the Minister explain why we never see the missiles or an American in uniform?

Mr. Stanley: The British people well understand the importance of maintaining deterrence at all levels and they voted accordingly in the general election. As for the hon. Gentleman's comments about American service men, I am confident that the overwhelming majority of the British people recognise and welcome the work that they do in this country.

Mr. Marlow: Is there any truth in the report in yesterday's Daily Express that those who are seeking to obstruct the deployment of cruise missiles in the United Kingdom are getting free legal support from the so-called National Council for Civil Liberties? If so——

Mr. Speaker: Order. That has nothing to do with the original question.

Mr. Denzil Davies: Why do the Government not admit that the deployment of cruise missiles has been a disaster? Militarily it has led to the deployment of other missiles— not SS20s—in eastern Europe;, diplomatically, it has led to the breakdown of all talks; politically, it has created tensions in western Europe that will have serious repercussions for NATO. Why do the Government not recognise reality and at least stop any further deployment?

Mr. Stanley: The right hon. Gentleman fails to recognise that if the cruise deployment had not gone ahead— and deployment was a NATO decision, the foundations of which were laid during the Labour Government's administration—the message conveyed to the Soviet Union would have been that it could increase its ability to subject the whole of western Europe and the free world to nuclear blackmail through the massive build-up of SS20s and strategic nuclear missiles in which the Soviets are engaging.

Jet Provost Trainer (Replacement)

Mr. Colvin: asked the Secretary of State for Defence if he will make a statement on the replacement of Jet Provost trainers for the Royal Air Force in accordance with air staff target 412.

Mr. Pattie: No decision has yet been taken on the replacement of the Jet Provost. As the House knows, we have sought proposals for a possible replacement. On 16 March I gave the House details of the four aircraft now being considered.

Mr. Colvin: I appreciate my hon. Friend's difficulty in giving a full answer at this time, but will he at least say


that the long-term future of the British aerospace industry is a very important factor which he will carefully bear in mind when reaching his decision?

Mr. Pattie: I can safely say to my hon. Friend that the future of the British aerospace industry and the strength of our defence industrial base are always matters of great concern to my colleagues and myself. That will be taken very much into account when we make our decision.

Mr. Stephen Ross: Can the Minister give us an assurance that the staff target will be adhered to and that his Department will not be tempted into increasing the performance criteria, which would be unnecessary for the replacement of an aircraft used for training purposes?

Mr. Pattie: I do not think that the hon. Gentleman would wish me to take the time of the House in debating the performance criteria. He knows what the staff target includes and obviously the RAF will want the best aircraft that meets that requirement.

Mr. Best: Will my hon. Friend confirm that the Firecracker aircraft conforms with AST 412, that it is all-British and that it would be a scandal if British pilots were not trained on a British aircraft?

Mr. Pattie: I do not think that my hon. Friend would expect me to comment in detail when we have not yet sent out the tender evaluation documents, but I note what he says.

Mr. McNamara: Is the Minister aware that many people regard the decision to go for a turbo-prop as opposed to a turbo-fan as a detrimental step that will set back the training of British pilots? Will the Minister tell the House, before he reaches a decision, about the tie-ups between the companies named for the four project planes, the set-offs to other countries and guarantees of other markets for the British project?

Mr. Pattie: When the hon. Gentleman talks about the advantages of a turbo-fan over a turbo-prop, he will be aware that in choosing the turbo-prop we recognise that possibly seven additional Hawk aeroplanes will be needed because of changes in the training curriculum. With regard to set-offs and other markets, the hon. Gentleman should table a written question on the matter, or I shall gladly write to him, whichever he prefers.

Chemical and Biological Weapons

Mr. Robert Atkins: asked the Secretary of State for Defence if Her Majesty's Government will re-assess the United Kingdom strategy on chemical and biological weapons.

Mr. Heseltine: The United Kingdom, together with its allies, is committed to achieving a verifiable comprehensive ban on chemical weapons at the conference on disarmament in Geneva. The United Kingdom, like the Soviet Union and the United States, is also bound by the 1972 biological weapons convention, which bans development, possession and stockpiling of these weapons.

Mr. Atkins: As it is arguable that the proliferation of chemical weapons would increase the possibility of a war involving chemical weapons, and bearing in mind our support for the Government's policy of negotiating for

reduction in such weapons, does my right hon. Friend believe that an offensive capability is needed in the United Kingdom as well as in the United States?

Mr. Heseltine: I am aware of the potential threat from Soviet stockpiles of those weapons, but I believe that the Government's priority is right in seeking comprehensive and verifiable arms controls, to which our energy is deployed.

Mr. Meadowcroft: To what extent does the current non-weapon research at Porton involve the production of toxic agents for testing purposes?

Mr. Heseltine: We are totally restricted to defensive capabilities, to ensure that we have the ability to protect our soldiers or members of the other armed services in the event of attack.

Mr. Key: Does my right hon. Friend agree that were it not for the work done at Porton Down, in which the British are leading the world in protection against chemical and biological weapons, we would not be in such a strong position to settle the problem in world terms?

Mr. Heseltine: I am sure that my hon. Friend is right. We cannot ignore the substantial Soviet offensive capability. It is right that we should review our defensive capabilities in the face of that.

Mr. McNamara: Is the Secretary of State aware that the Opposition support the Government in seeking a proper and effective worldwide ban on the use of chemical and biological weapons? Is he further aware that we would support him wholeheartedly in not giving way to pressures from Conservative Back Benchers or senior officers of the armed services who urge that a chemical capability should be vested in Her Majesty's armed forces?

Mr. Heseltine: I hear what the hon. Gentleman has to say, but he must be aware that my hon. Friends and members of the armed services, to whom he referred, must consider the possibility that the Soviets may have very large stockpiles of offensive weapons based in forward positions.

Mr. Kirkwood: asked the Secretary of State for Defence whether he is satisfied that appropriate defensive arrangements are in place to enable Her Majesty's Government forces to withstand a major attack by chemical weapons.

Mr. Heseltine: A substantial investment has been made over many years in providing the armed forces with defensive protection against chemical attack. We shall continue to keep our defensive measures under review in the light of that threat.

Mr. Kirkwood: If the offensive arrangements are satisfactory and this country is committed to a verifiable ban on chemical and biological weapons, and we have no stocks in any case, can the Secretary of State explain to the House the point of retaining the right to retaliate under the Geneva protocol?

Mr. Heseltine: If the hon. Gentleman heard the answer that I gave earlier he would know that we constantly keep our defensive capability under review. That must be our responsibility.

Mr. Terlezki: What representations, if any, have the Government made to the Soviet Union about the build-up of chemical weapons, which it is using in Afghanistan and other parts of the middle east?

Mr. Heseltine: My hon. Friend will appreciate that that is a matter for my right hon. and learned Friend the Foreign Secretary. However, he will be encouraged by the efforts that my right hon. and learned Friend is making to pursue arms control in this critical area.

Mr. Denzil Davies: Will the Secretary of State now answer the question that I asked earlier about air-land battle? Does it envisage the use of chemical and nuclear weapons in addition to conventional ones?

Mr. Heseltine: The right hon. Gentleman will remember the answer that I gave. That is not NATO policy. It is a matter of discussion in the NATO Alliance and until we reach conclusions it would be inappropriate for me to give firm decisions on behalf of the Government.

Territorial Army

Mr. Canavan: asked the Secretary of State for Defence if he will make a statement about the implementation of his plans to expand the Territorial Army.

Mr. Heseltine: I refer the hon. Gentleman to the statement that I made on 26 March.

Mr. Canavan: As some of the new units are to be recruited in areas of high unemployment, is this merely a part-time job creation scheme? If it is really necessary for the defence of the nation, is the enemy external or internal? Will the Secretary of State give us the assurance which he failed to give a couple of weeks ago on the Floor of the House to the effect that under no circumstances will the Territorial Army be used to deal with the potential civil unrest which the Government are provoking by their policies of confrontation?

Mr. Heseltine: The hon. Gentleman is as aware as anyone else that the Government have no intention of changing any of the existing procedures in this matter.

Oral Answers to Questions — PRIME MINISTER

Engagements

Mr. Montgomery: asked the Prime Minister if she will list her official engagements for 10 April.

The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others and met the Amir of Bahrain on his arrival for a state visit. On my return I sent to the Civil Commissioner in Port Stanley a message expressing the Government's deepest sympathy at the tragic loss of life and injury sustained in the fire at Port Stanley hospital earlier today. In addition to my duties in the House I shall be having further meetings later today. This evening I hope to attend a state banquet for the Amir of Bahrain at Windsor castle.

Mr. Montgomery: Is my right hon. Friend aware that she will have widespread support for her robust support for the police in their difficult task of ensuring that people who want to go to their place of work can do so unmolested?

The Prime Minister: I am grateful to my hon. Friend. I believe that the police have overwhelming support in the

country and among those miners who have been able to go to their place of work because of the careful attitude of the police in this matter.

Mr. Lofthouse: Is the Prime Minister aware that, within 12 months, it is possible that all miners over 50 years of age will have lost their jobs? Have the Government any plans to encourage alternative industry in those mining areas, or does she intend that those young miners should never work again?

The Prime Minister: In so far as the mines are in special development areas or areas in which there is special development assistance, that assistance will apply. In so far as other grants for the start of small businesses or enterprise allowances are available, they also will apply. Might I point out that when miners over 55 have to retire the terms for them are, I believe, more generous than have been provided by any previous Government.

Mr. Kinnock: The Prime Minister told Sir Robin Day last night that she wanted a go-getter society. As we now have more than 1 million 18 to 24-year-olds unemployed in Britain, can she tell them where they can go and what they can get?

The Prime Minister: If the right hon. Gentleman had listened a bit more carefully he might have learnt a little more. I said that we need an enterprising society—no Government can succeed without the men and women of enterprise.

Mr. Kinnock: Goverments cannot provide the men and women of initiative, but they can prevent the men and women of initiative. As 23 per cent. of 18 to 24-year-olds are without jobs, will she tell us what she will do to enable them to use their initiative, vitality, intelligence and talents? What will she do instead of give the smug sermons that have now entirely taken the place of economic policy?

The Prime Minister: If the right hon. Gentleman puts the two parts of his questions together, he will see that the Government have encouraged the men of enterprise by reducing many of the controls and by levying much less direct taxation on enterprise. Indeed, if we had the Labour tax regime, we would now be paying £3·5 billion more in income tax. As far as the young people are concerned. we have provided the best training scheme ever, and that, together with the enterprise and training schemes, is producing the results which the right hon. Gentleman refuses to recognise, but which are there.

Mr. Speaker: Mr. Yeo.

Mr. Nellist: Could the right hon. Lady live on £25 a week? How much is that banquet tonight costing?

Mr. Speaker: Order. I must say to the hon. Gentleman that if he does that again he will have to leave.

Mr. Yeo: Does my right hon. Friend agree that, if individual civil servants are to be free to decide in respect of which actions and information they obey the Official Secrets Act, and in respect of which matters they flout that Act, the business of Government would rapidly become completely unworkable.

The Prime Minister: I agree with my hon. Friend. No Government can carry on except with the total trust of the Civil Service, and I believe that we have that total trust except in very rare individual cases.

Mr. Steel: Is the Prime Minister making any representation today to the United States Government about their dangerous activity in mining the ports of Nicaragua?

The Prime Minister: We have previously made it very clear to the United States Government that we are against mining the ports in Nicaragua because, of course, it is very dangerous to international traffic on the high seas.

Mr. Leighton: asked the Prime Minister if she will list her official engagements for Tuesday 10 April.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Leighton: In the interests of the safety of British seafarers, would the Prime Minister consider co-operating with the French in removing the mines laid in Nicaraguan waters?

The Prime Minister: We have not the resources out there to do so.

Mr. Key: Will my right hon. Friend, in expressing the sympathy of all of us for those who were killed in the fire in the Falkland Islands hospital, recall that she visited that hospital herself and saw the conditions there? Will she further recall that, more than a year ago, a report was made condemning the fire safety procedures in that hospital and that British troops were moved out of it some weeks ago because of fire hazard? Will she do all that she can to encourage the Falkland Islands Government to replace that hospital as soon as possible, in the interests of the civilian population, especially the old people who were in it?

The Prime Minister: A new hospital is planned. I am afraid that, of necessity, it will take some time to build. We shall do all that we can to speed up the building and, in the meantime, to provide other alternative facilities.

National Economic Development Council

Mr. Renton: asked the Prime Minister whether she will make a statement on the future of the National Economic Development Council.

The Prime Minister: I regret that the TUC has chosen to forgo the benefits to its membership of participation in the council. We have no intention, however, of taking hasty decisions, especially since the work of the economic development committees has not been affected.

Mr. Renton: Would my right hon. Friend care to remind the TUC of Clem Attlee's maxim, "Never walk out because you will only have to walk back"? While the TUC is sulking in its tent, will she and the Chancellor consider how the work of NEDC can be improved and made more useful, for example by studying which are the services and industries in which Britain must be competitive in the 1990s, and how to achieve this?

The Prime Minister: I very much endorse the views of my hon. Friend. As he knows, the TUC walked out at the very time when a review of the industries of the 1990s was being undertaken for the purposes that my hon. Friend deduces—a review which the TUC had enthusiastically endorsed. I hope that it will soon come back to take part in it.

Mr. Tony Banks: Modesto Collados, the new Minister of Industry in Chile, said last week that Chile can live——

Mr. Speaker: Order. I think that the hon. Gentleman may have the wrong question. The question is concerned with NEDC.

Engagements

Mr. Hoyle: asked the Prime Minister if she will list her official engagements for Tuesday 10 April.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Hoyle: I understand that on television last night the Prime Minister said that she answers for what she does. In view of that remark, will she answer for when her public and private interests may have overlapped by telling the House when she learnt of her son's interest in Cementation, how much he received as a fee for that, and what he was doing in the Gulf at the time of her state visit to Oman?

The Prime Minister: I have nothing further to add to the reply that I gave last Thursday.

Mr. Best: Does my right hon. Friend agree that it is very sad that Miss Zola Budd should have to seek citizenship of another country in order to exercise her talents, and that she and her Government should be congratulated on striking a blow for freedom in sport by enabling that young lady to have at least an opportunity to demonstrating her abilities at the Olympic games?

The Prime Minister: Whether or not Miss Zola Budd has that opportunity is a matter not for me but for those who select the Olympic runners. As my hon. Friend knows, my right hon. and learned Friend the Home Secretary acted very quickly in her case to give her an opportunity, should others so decide.

Mr. Gould: asked the Prime Minister if she will list her official engagements for Tuesday 10 April.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Gould: Under the regime established by the Prime Minister in these matters, why are Ministers not subject to the same strict rules as apply to civil servants in respect of conflicts of interest involving members of their families?

The Prime Minister: I have already answered questions on this matter—[Interruption.] I do not think that the rules differ from what they have always been.

Mr. Soames: Is my right hon. Friend yet in a position to tell the House something of the nature of the reply that the Government have recently made to the proposals put forward by the Government of the Argentine?

The Prime Minister: A reply has been sent. Initially we sent a message to the Argentine. It replied to us. We have now replied to its message, but for the time being that reply is confidential.

Mr. Latham: asked the Prime Minister whether she will list her official engagements for 10 April.

The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.

Mr. Latham: Can my right hon. Friend prescribe any early cure for the sad political laryngitis that continues to prevent the Opposition Front Bench from condemning the loutish militant picketing—[Interruption.]

Mr. Speaker: Order. We dealt with that matter last week. The Prime Minister cannot answer for the Opposition.

Ms. Clare Short: Will the Prime Minister give an undertaking to the unemployed that she will not allow any cuts in the public employment service that diminish the chances of the unemployed being offered a job, training or even a place on a scheme for the unemployed?

The Prime Minister: I am not quite sure what the hon. Lady is getting at. If she is talking about jobcentres, I should point out that the number of jobcentre outlets was increased in the recent statement.

Mr. Dobson: asked the Prime Minister if she will list her official engagements for Tuesday 10 April.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Dobson: Does the Prime Minister recall being a sponsor of the private funding of the Elizabeth Garrett Anderson hospital, which included in its promotional literature the statement that the hospital would provide for the treatment of women by women? If so, why does she not force the DHSS to honour that pledge?

The Prime Minister: I think that the hon. Gentleman is referring to when it is necessary to have male consultants on duty. I believe that the position has been fully explained to the hon. Gentleman by my right hon. and learned Friend the Minister for Health. It is necessary to have that arrangement to keep the main purpose of the hospital going.

Mr. Couchman: Is my right hon. Friend aware that in their desperation to save the GLC members of the Labour

party are presently organising a petition and are so enthusiastic about it that they are even signing up 11-yearold children, such as my daughter?

The Prime Minister: We have made our policy on the GLC very clear, and the paving Bill will be introduced very shortly.

Mr. Alton: asked the Prime Minister if she will list her official engagements for Tuesday 10 April.

The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.

Mr. Alton: What plans do the Government have for the revitalisation of areas that will be devastated by the closure of coal mines?

The Prime Minister: Coal miners in special development and development ares are eligible for the many grants available. Where help is needed, small business or enterprise allowances are available. We have no plans at the moment to increase the number of enterprise zones.

Mr. Teddy Taylor: As my right hon. Friend has shown great sympathy for the people of Afghanistan, who have been persecuted by the Soviets, does she agree that it is outrageous that the Common Market should have increased its exports of cheap, subsidised food to Russia by 600 per cent. since 1979? Is there really nothing that we can do about that outrageous financing of the Russian defence budget?

The Prime Minister: As my hon. Friend is aware, these matters are decided by a majority vote and therefore we are not able to affect the outcome. My hon. Friend is also aware that we have voted against such goods being heavily subsidised.

Points of Order

Questions to Ministers

Mr. D. N. Campbell-Savours: On a point of order, Mr. Speaker. I wish to raise the matter of questions and the finding by the Select Committee in 1972 concerning parliamentary questions, in particular the blocking of questions by the Prime Minister, an example of which we saw today, and the blocking reply which she gave to my hon. Friend the Member for Fife, Central (Mr. Hamilton) on Thursday last week.
Blocking is dealt with in paragraph 7 of the Select Committee's report, which states:
The ability of the Government to block questions by means of a refusal to answer is a consequence of its being under no obligation to answer any particular Question at all. This right is so powerful a protection against legitimate enquiry, however, that although no instances of abuse have been drawn to Your Committee's attention, they consider that the present absolute rule against Questions refused an answer should be modified.
The Committee goes on to modify by way of the three-month rule to which you, Mr. Speaker, have repeatedly drawn our attention.
Last week the Prime Minister came to the Dispatch Box and, as she has repeatedly done in the last few months, answered questions in a particular way with a view of avoiding further questions being placed upon the Order Paper.
The question asked by my hon. Friend the Member for Fife, Central was highly relevant to proceedings in the House. The reply by the Prime Minister last week was not given in the normal sense of the word. She read it to ensure that the position was precise in relation to further questions which I wished to table and which I have in my possession but which I am not able to table because of the block by the Prime Minister placed upon the tabling of questions. Perhaps I can refer to one of them specifically because it relates——

Mr. Speaker: Order. I think that I have understood the point of order. The hon. Member raises a matter which was dealt with by the 1972 Select Committee. It would be in order for him to raise the matter again with the current Select Committee. The hon. Gentleman will know that I have to deal with the rules of the House as they are. I cannot change them on my own account.

Mr. Campbell-Savours: I have not completed my point of order, Mr. Speaker, because I wish to mention the reference in that report to the word "abuse"——

Mr. Speaker: Order. The hon. Gentleman may not have finished, but he and the House will appreciate that we have important business to deal with today. I have dealt fully with the hon. Gentleman's point of order. I shall not be able to say any more than I have already said, to there is no point in pursuing it. Another point of order—Mr. Banks.

Mr. Tony Banks: rose——

Mr. Campbell-Savours: On a completely different point of order——

Mr. Speaker: Order. I think that that is an abuse— Mr. Banks.

Mr. Campbell-Savours: rose——

Mr. Speaker: Order.

Local Government

(Interim Provisions) Bill

Mr. Tony Banks: I have on the Order Paper today a motion that relates to the special nature of the Local Government (Interim Provisions) Bill, which is due to be given its Second Reading tomorrow. It is a Bill that will disfranchise Londoners, with others. In view of the established precedents, which are well documented and laid down in Erskine May, which allow that when such a measure is moved the people so disfranchised can have their representatives appear at the Bar of the House, I am asking for the leaders of the Greater London council and ILEA to be instructed by the House to appear at the Bar of the House and inform the House of the nature of the proposed legislation.
Will you, Mr. Speaker, arrange that this motion can be debated and given some priority in view of the nature of the legislation which we shall be asked to discuss tomorrow?

Mr. Speaker: I have seen the motion. It is not an instruction but a free-standing motion and has the same status as any other motion on the Order Paper. It is not for me to call it, I am afraid.

Mr. Campbell-Savours: On a point of order, Mr. Speaker.

Mr. Speaker: I must say to the hon. Gentleman——

Mr. Campbell-Savours: rose——

Mr. Speaker: Very well, if it is a separate point of order.

Questions to Ministers

Mr. Campbell-Savours: It relates to another matter concerning parliamentary questions and the rights of Members. According to Erskine May—and perhaps I can quote precisely what is said——

Mr. Speaker: Perhaps the hon. Gentleman would be kind enough to tell me the page so that I can look it up.

Mr. Campbell-Savours: It is page 334:
The Speaker is the final authority as to the admissibility of questions. … The Speaker's responsibility in regard to questions is limited to their compliance with the rules of the House.
It is those rules which I wish to refer to in my second point of order.

Mr. Speaker: I must stop the hon. Gentleman there, because that is the very matter that I have already dealt with. I cannot say any more to him or to the House. I am bound by the rules of the House. If the hon. Gentleman wishes to change the rules, he has a very good opportunity. A Procedure Committee has now been set up. If he raises the matter with it and if it makes a recommendation, it will be for the House to decide.

Mr. Andrew Faulds: On a point of order, Sir, I understand the extreme delicacy of this matter. [Interruption.]

Mr. Speaker: The hon. Gentleman is seeking to be helpful, I think.

Mr. Faulds: I understand the extreme delicacy of this matter as it affects you, Mr. Speaker, and your office. But, I must make the point, although I can understand that there are limitations within which you can respond to the representations of my hon. Friend the Member for Workington (Mr. Campbell-Savours), there is a grave danger that the public may interpret your interventions in these issues as protecting the Prime Minister——

Mr. Speaker: Order. That is an accusation totally unworthy of the hon. Gentleman. He knows perfectly well that total impartiality is demanded of the Chair and that I am, in all my rulings and judgments on these matters, totally impartial. I say again to him—and he need say nothing further—that I am bound by the rules of the House and I have no authority to change them.

Mr. Faulds: I accept that.

Mr. Speaker: Order. There is nothing more to be said on the matter.

Mr. Faulds: You are misinterpreting me, Sir——

Mr. Speaker: I must ask the hon. Gentleman to sit down.

Mr. Faulds: I am making no reflection on the Chair.

Mr. Peter Rost: On a point of order, Mr. Speaker. A few moments ago, you will recall, you rebuked my hon. Friend the Member for Rutland and Melton (Mr. Latham) halfway through a question to the Prime Minister when he was apparently seeking the opinion or views of the Prime Minister on a matter. As somebody who has on a number of occasions in the past sought the views of the Prime Minister on any number of issues for which he or she may not have had direct responsibility, I wonder whether I could have your guidance. I am thinking of the views of the Prime Minister on the matter of a regime in a foreign country, or something like that. Perhaps we could have your guidance on whether we are now establishing a new ruling as to what is or is not in order when it comes to seeking the views and opinions of the Prime Minister on any matter.

Mr. Speaker: Order. I am glad to have an opportunity to answer the hon. Gentleman. I am sure that the House will agree that the Prime Minister comes to the Dispatch Box to answer questions on matters for which she has responsibility. She can have no responsibility for the views of any other hon. Member.

Mr. Robert Adley: Further to that point of order, Mr. Speaker. Was that not the case until the Leader of the Opposition—not the present one— became a paid office holder? Surely the Prime Minister, as First Lord of the Treasury, has the ability to answer questions——

Mr. Speaker: Order. The Prime Minister cannot be put in the position of seeking to discover what is in the mind of the Leader of the Opposition, or of any other hon. Member.

Bank Notes (Scotland)

Mr. Michael Forsyth (Sterling): I beg to move.
That leave be given to bring in a Bill to regulate the issue of bank notes in Scotland.
Hon. Members who have the good taste to visit Scotland will be aware that our banks enjoy the right to issue their own bank notes—[Interruption.]

Mr. Speaker: Order. Perhaps the hon. Gentleman will wait a moment while hon. Members leave the Chamber.

Mr. Forsyth: Those hon. Members who take their holidays in Scotland will be aware that our banks have the right to issue bank notes. As more and more people from north of the border come to England, hoteliers and traders have become aware of the fact. It may be for the convenience of the House if I briefly outline how that came about.
The banking tradition of Scotland is markedly different from that of England, and I make no nationalist point in saying so. Scottish banks were founded to finance trade and industry, whereas the Bank of England was established to lend money to the state. Indeed, the 13ank of Scotland's governing rules specificially provided for heavy penalties if it lent money to King William, which was very wise.
Under wiser legislation in Scotland joint stock banks were encouraged, while they were all but banned south of the border. Scottish banks have been innovative in their approach. They pioneered the idea of branch banking. For good or ill, they virtually invented the overdraft.
The history of banking in England is one of growth in the privileges and power of the Bank of England, together with the development of a large number of small, locally based private banks outside London. In Scotland, there were fewer banks covering larger areas. Whereas English banking suffered a series of troubles during the 18th and 19th centuries with the over-issue of bank notes, inflation and recurring crises, the picture in Scotland was different —one of stability and prudence.
It may appeal to some Opposition Members if I mention that Karl Marx—not often quoted on these matters— rose to the defence of the Scottish banking system. He pointed out that Scotland never experienced a real monetary crisis. He said:
The fact that a few banks—exceptions—collapsed because they had made careless loans is irrelevant".
There was no depreciation of notes, no complaints and no inquiries into the sufficiency or insufficiency of the currency in circulation. That is conclusive proof that, even in the 19th century, Karl Marx understood the importance of monetary policy.
As a result of the unhappy English experience, Sir Robert Peel introduced major reforms to the banking system in 1844 and 1845. No new banks were allowed to issue bank notes, and existing banks could do so only under certain strict conditions. The fiduciary issue— those notes that had no backing other than public confidence in the bank—were restricted to their existing quantity and any further notes had to be backed by gold. Nowadays, Bank of England coins and notes have taken over this role.
However, in England further restrictions applied. The right to issue notes was lost if a bank merged with another or, revealingly, if it set up business within 65 miles of the


City of London. The aim, which was clear, was to develop a Bank of England monopoly of bank notes, and it succeeded. The economic necessity of mergers and the financial attractions of the London market meant that the number of banks entitled to issue their own notes rapidly diminished. There were 279 in England in 1844. The last one, Fox, Fowler and Company Limited of Wellington, Somerset, lost the right in 1821 when it merged with Lloyds.
Neither restriction applied in Scotland. There were 19 banks entitled to issue their own notes in 1945. Amalgamations have reduced that total to three, these being the Royal Bank of Scotland, the Bank of Scotland and the Clydesdale Bank. Apart from a small fiduciary element of £2·7 million, their notes are all backed by the Bank of England. The right, however, is so well used that they provide two thirds of the notes circulating in Scotland.
There is another way in which Scotland differs from England. We have a much longer and stronger tradition of trustee savings banks. This brings the benefit of banking facilities and services to ordinary working people and their families. Over 21 per cent. of the United Kingdom TSB deposits are held in Scotland. At the time of the Peel reforms, the savings banks were small and localised and their very nature precluded the issue of bank notes. That situation has changed and the TSB movement has gradually been extending its range of services on offer to their customers, and through amalgamations has created one bank in Scotland that will eventually become part of the UK-based organisation. In Scotland, the new TSB is broadly of comparable size to the existing three banks and is willing and able to compete with them on equal terms, or almost equal terms. It does not enjoy the right to issue its own notes and, therefore, does not enjoy the financial advantage which that brings and the considerable advertising benefits that accrue.
My Bill proposes to give it that right and to give to Commissioners of the Inland Revenue the power to extend that right to any other Scottish bank that might in future reach such a size as to merit it. No such bank exists at present.
It would seem that the only argument against this modest measure is that TSB (Scotland) will eventually be

part of a United Kingdom bank, but the Clydesdale Bank, which is wholly owned by the Midland Bank, is in that position, and similarly the Royal Bank of Scotland, which derives half its business from the Williams and Glyn's operation. Nor can there be any objection from the Treasury to such an extension of existing rights. A series of parliamentary questions has confirmed that the right to issue bank notes, which have to be covered by holdings of the Bank of England, imposes no costs on the Government, deprives it of no income and does not interfere with its management of the economy.
This is a modest step compared with the more radical reforms of Scottish banking that have been proposed recently from a variety of sources. None the less, it would be a significant step. It would strengthen the identity of a bank that has long held close and personal relations with the Scottish people. It would reinforce the separate character of Scottish banking and it would encourage competition. Banking and financial services are a growth area in the Scottish economy. The Scottish banks have a proud record of service to the people of Scotland. It is a record that should be recognised by continuing this unique development along purely Scottish lines. Competition and the emergence of new banks have always been part of that development.
Peel's reforms inhibited that process. The Bill aims in a small way to remove once such inhibition. Giving TSB (Scotland) the right to issue bank notes will encourage competition and at the same time strengthen an individual characteristic of Scottish banking by extending its scope. The Bill has friends on both sides of the House, and I ask the House to give it support.

Question put and agreed to.

Bill ordered to be brought in by Mr. Michael Forsyth, Sir Hector Monro, Mr. Nicholas Fairbairn, Lord James Douglas-Hamilton, Mr. Albert McQuarrie, Mr. Gerald Malone, Mr. John Maxton, Mr. Archy Kirkwood and Mr. Gordon Wilson.

BANK NOTES (SCOTLAND)

Mr. Michael Forsyth accordingly presented a Bill to regulate the issue of bank notes in Scotland: And the same was read the First time; and ordered to be read a Second time upon Friday 27 April and to be printed. [Bill 153.]

Coal Industry Dispute (Police Operations)

Mr. Allen McKay: I beg to move, That this House do now adjourn.
Leave having been given on Monday 9 April under Standing Order No. 10 to discuss:
The implications for civil liberties and the rule of law of policing operations connected with the current mining dispute.

Mr. Speaker: Before the hon. Member proceeds, I must tell the House that no fewer than 27 right hon. and hon. Members have already indicated their wish to take part in this important debate, and there may be others who wish to take part. I hope that this will be a day on which Privy Councillors will set an example to Back Benchers by making brief contributions.

Mr. McKay: This is a short but important debate, and now that I know how many hon. Members wish to take part, I shall not detain the House for long. I am sure that, in addition to my hon. Friends, Conservative Members will be anxious to take part to put forward their views and those of their constituents.
I stress at the outset that this debate is not, and has not been initiated as, an attack on the police. Far from it. It is about the new and heavy method of policing that has crept in and which our constituents continually report to us is taking place, in particular by what appears to be a section of the police in specific areas.
Not all pickets have made such complaints. Indeed, some have praised the police and the policing and have said that they have received a good deal of help from police forces in some areas. It has been reported to me that, by and large, those policemen are from the localities, from Yorkshire and Nottinghamshire. Indeed, in one instance, where the relationship between police and pickets has been extremely good, the pickets were warned by the sergeant in charge of the police contingent that "the heavy squad are coming," as he put it, and he told the pickets to be on their best behaviour. He advised them that it would probably be best if they moved out of the locality and returned later. They did what he suggested.
Conservative Members should not mistake the freedom that we have to discuss policing methods, and even to complain about those methods, as an attack on the police. They should also remember that many people on the picket lines have never before seen so many policemen together in one place at one time. They should bear in mind also that many of those who comprise the picket force come from small mining villages and that they probably have very good relationships with the local bobby, perhaps, generally speaking, the only bobby they ever see. They are frightened by the show of force, and they react to that situation.
These men are demonstrating, in the only way they know, against the possible loss of their livelihood, of their wages. They have only this one means of keeping a roof over their heads, and their families.
I regret very much the need for this debate, because the police should never have been involved in the way that they have. The Government were warned what would happen when they decided to bring the law into the sphere of industrial relations.

Mr. Robert Adley: rose——

Hon. Members: Sit down.

Mr. McKay: The Government were warned time and again of the erosion of civil liberties as they pressed ahead with the Trade Union Bill, the Police and Criminal Evidence Bill, various employment protection measures, the Data Protection Bill and immigration legislation. We have seen what happens when the courts and the law are involved in industrial relations. I have never condoned violence or violent intimidation in any shape or form. I condemn it wherever it occurs, no matter which side uses it. People react if flashpoints are created.
I accept that the police have a difficult job. They have a hard role to play, and at times they find themselves in the middle, receiving abuse from both sides. As my right hon. Friend the Member for Mansfield (Mr. Concannon) said in an earlier debate, minorities have rights. I wholeheartedly agree with my right hon. Friend. There have been problems. I am sure that the sympathies of all hon. Members will go out to all who have been injured or killed on picket lines and to their families. One of the members of the British Association of Colliery Management was killed at work while undertaking safety measures during this incident.
However difficult their job, the police are professionals. They are skilled and trained. The public expect the police to be even-handed and to impose the law sensibly and sensitively. After this incident is over—I stress this point—we must live together again. Serious allegations have been made about police tactics and methods. If those allegations are true, they raise serious issues. Is it relevant or irrelevant to ask political questions about this matter? Is it right that our constituents should be handcuffed, photographed, fingerprinted and placed in cells? Those men are not common criminals. They are not bank robbers, but good honest men. The chairman of a tribunal to which I had to go said that those men are the salt of the earth. They should be better treated. It is no joke for those men, sitting in a police van waiting for transport, to hear the remark, "It is not full. Hold it up for a while, while we go back and get some more."
I have been given permission to state some of the names of people involved in this matter. Geoff Sellars, to whom I previously referred, phoned me expressing feelings not of anger but of regret. He is a person known for his level-headedness, and is certainly not easy to rile. He just wants to get on with his work. He is appalled at the unnecessary heavy handling, which he believes has inflamed an already delicate position. He told me that the picket line asked the police, "Can you let three people go in to talk to the men involved?" That request was refused. Verbal abuse was thrown by the crowd at the people going through the picket lines. The police said, "If you do not shut up, we shall arrest the lot of you for shouting."
To add insult to injury, when the picket line was attacked by people coming from a public house and throwing half-pint and pint glasses, little action was taken against the offenders. Can one doubt that the incident was inflamed? The result is that Geoff Sellars returned to the police a commendation he received a few years ago for his assistance in helping a police sergeant who was being violently abused by a number of youths.
Barry Drury, a former special constable, was stopped on approaching a colliery. Because of his experience in the special constabulary, he told the police that he wished to proceed peacefully to picket peacefully and that he wanted


no problems. Again, freedom of movement was curtailed. Barry produced his driving licence for identification, and it was checked. When the policeman came back, Barry was told, "You will not be able to proceed any further. You must not come into Nottingham again. If you do, your car will be impounded and you will be arrested." That order is now on the police files.
Dave Stubbins, when doing his picket duty, suffered an angina attack. Permission to take him into the ambulance room and into hospital for medical attention was refused until the colliery manager came to ask for permission.
Mr. R. Glover was sent on a picket line at Linby colliery. He was changing a wheel because of a puncture when a patrol car came up and the police asked him to go back. They said that he could not proceed to that colliery. Mr. Glover said that he would go to another colliery. He was asked for its name and said, "I am sorry, I am not telling you that." When Mr. Glover and his passengers arrived at the colliery they found that there were only five policemen and no pickets. They went across and said, "Good morning," to the police and were shuffled on to the causeway so that they would not obstruct the highway. That is the reason the policemen gave them.
The first line of men coming to work said that they would not cross the picket line. The police came across to the pickets immediately and shuffled them down the road in the opposite direction to their car. Mr. Glover alleged that he felt a blow on his back. He protested and said that he already had an injury to his back. He received another blow. He was then summoned for obstruction and taken to the police station.
Four people have given evidence of incidents. Is not the stopping of men 100 miles away from their destination, on the assumption that they will commit a breach of the peace, an unacceptable erosion of civil liberties? It is a dangerous precedent. Who will be next? Will we have football supporters— [HON. MEMBERS: "Yes."] I hear "Yes." That shows that some hon. Members want an increase in the curtailment of freedom. Do we stop the National Front marching in sensitive areas? Do we stop gangs of motor cyclists moving into Brighton and Southend? They may be stopped; but they are allowed eventually to proceed.

Mr. Adley: rose——

Mr. McKay: Do we stop football hooligans from going abroad? Are they next in line? The Parliamentary Under-Secretary of State for the Environment with responsibility for sport said that we could not take away football hooligans' transport, refuse to sell them tickets, or prevent them travelling, because they had not committed offences.
Why do we stop the miners, therefore, who have not committed offences? Are we seeing the beginning of a national police force? Let us consider the abolition of the metropolitan counties. Police were under the control of the watch committees and then they went under the control of the counties. Who will control police forces when the metropolitan counties are abolished? Will it be a quango? What happened to the elected water authorities? Those elected bodies became selected bodies. Are we in danger of having a body selected by the Secretary of State to be in charge of the police? Those are some of the matters worrying many of my constituents.
It is not just Members of Parliament who are worried. I shall quote from an article in The Guardian which states
Mr. Leon Brittan, the Home Secretary, is apparently outraged by Opposition criticism of the police role in the pit dispute. Such critics, he claimed last weekend, are trying to shake public confidence in the police and the rule of law.
That is entirely wrong. The article continues:
If public confidence has been shaken, however, it is more likely to have occurred as a result of the behaviour of the police themselves rather than the comments of their critics.
The article outlines some of the incidents which will be mentioned by my right hon. and hon. Friends.
I conclude by asking a number of questions. Who appointed the chief constable to work at New Scotland Yard? From where does he derive his authority? To whom is he accountable and responsible? Did the chief constables of the areas to which the reinforcements have gone ask for them or were they imposed upon them? How will the costs of the extra policing be met? The Association of Metropolitan Authorities is worried about the cost of the police. In a document it says:
There are, of course, other serious implications arising from the scale and nature of the exercise that we rill need to discuss at our Committee next week. We will need to exchange information about communications between the national coordinators and the police authorities and the effect of the events of the past few weeks on police/public relations. Our sole interest is maintaining the efficiency and good name of the forces serving the areas we represent.
We say "Amen," to that.
It would appear that by exercising extra powers there is a change in policing. None of those changes have been debated or decided by Parliament and nothing seems to be accountable to Parliament. That is why I asked for, and am grateful for having been given, this debate.

The Secretary of State for the Home Department (Mr. Leon Brittan): What has been happening in the miners' dispute over the past few weeks undoubtedly raises some fundamental questions about the rule of law in our society and means of enforcing it. It graphically illustrates the resolution invariably needed in a democracy, although by no means always actually displayed in democracies, if physical coercion is to be resisted, but that is not why we are debating this aspect of the current dispute.
We are debating it because the Opposition have been completely unable or unwilling to express any coherent view about the real issues that we face today, and have instead sought to divert attention from their own disunity and paralysis by flinging mud at the police. Today they are not even doing so in a very courageous way. After publicly huffing and puffing for days about their intentions, they finally stood back and sent the hon. Member for Barnsley, West and Penistone (Mr. McKay) in to bat for them. He has expressed what those who know him realise, in his case, are genuine anxieties about aspects of police operations. He has referred to a number of incidents. I want to give him this assurance. All complaints about police officers' actions, whoever makes them and with whatever motive, will be recorded and investigated as required by law.
The outcome of each investigation will, as necessary, be subject to the independent scrutiny of the Director of Public Prosecutions and the Police Complaints Board on the criminal and disciplinary aspects respectively. There are no special formalities involved in making complaints


against the police. Of course, many people are content to make general allegations but are reluctant, for whatever reason, to formulate specific complaints. Up to 8 April inclusive, the total number of complaints against police received by chief constables was 19 in an operation going on for weeks and involving at times 7,000 extra policemen.
The police have everything to gain and nothing to lose from the proper scrutiny of their activities.

Mr. Dennis Skinner: rose——

Mr. Brittan: They are in no sense above the law and have no wish to be. They are the servants of the law and our principal bastion against those, whoever they may be, who seek by force to impose their will on their fellow citizens.

Mr. Joseph Ashton: If 800 miners are arrested and put before the court, that immediately makes the matter sub judice. If they are never brought to trial, that puts them in limbo. How can they then make a complaint against the police?

Mr. Brittan: I happily assure the hon. Gentleman that that is no obstacle to their making complaints against the police.
It is right to consider what the Opposition have firmly sought to obscure—the circumstances which have given rise to the current heavy level of policing, about which the hon. Member for Barnsley, West and Penistone has understandably expressed anxiety. Let us be clear about one thing; any responsible citizen must view with profound regret the fact that such policing is necessary. No one wants it—not the Government, not the police and not the public. Its purpose is not to jeopardise civil liberties but to protect them.
Let us remember what led to the present police action. It is so easy to forget the events at Ollerton some weeks ago. No one can now doubt the desire of the Nottinghamshire miners to carry on working. At Ollerton on the night of 13–14 March 500 pickets arrived at the pit. There were violent scenes and, as a result, only a handful of miners were able to cross the picket line. Three policemen were injured. Violent scenes were repeated on the following evening. What happened at Ollerton was appalling and unacceptable. What would the House have said if the Home Secretary had failed to give the police his full backing for stopping such intimidation? What would the public have thought of their civil liberties if the police had allowed that intimidation to continue? What happened at Ollerton is in no way untypical of what can occur if picketing gets out of hand.
Yesterday about 2,000 Yorkshire pickets arrived at Babbington colliery in Nottinghamshire. There were only 20 police officers there at the time; 119 workers were due to go into work and they were faced with 2,000 pickets. Police reinforcements were called and the entrance to the colliery was cleared. Attempts were then made by the pickets to break through the cordon. Stones were thrown. Eighty-eight arrests were made, but 113 out of 119 men were able as a result of the police presence to go to work as they wished.
At Cresswell in Derbyshire yesterday morning there were 900 pickets and 400 police. A concerted but unsuccessful attempt was made to break through the cordon; 147 men expressed their wish to work and went

in to work. By the late evening the number of pickets at Cresswell was between 1,000 and 1,200. The objective of the pickets was to block the two main entrances to the colliery. While this was going on, up to 200 other pickets were roaming the village. The police are currently investigating a series of complaints that the doors of miners' houses were marked with paint, that five cars were deliberately scraped, that nails were placed on the public road and that bricks and other missiles were thrown as miners were entering the colliery.
This was not an isolated incident. At other places over the past few weeks private cars owned by miners going to work have had their tyres slashed, windscreens smashed and paintwork scratched. Stones, bricks and bottles have been thrown. Nails have been put down on the roadway. Colliery entrances have been obstructed with concrete blocks. Miners not on strike have had the windows of their houses broken and the houses daubed.
At Siverdale colliery this very morning nails were welded together to form star-shaped objects which were then thrown on the roadway into the path of police horses.
There is nobody in the country today who can have the slightest doubt of the clear intent of the militant miners' leaders.

Mr. Skinner: rose——

Mr. Brittan: It was to avoid a national ballot at all costs and to bring about the closure of the whole coalfield by picketing in such numbers, accompanied by such intimidation, that most people who wanted to go to work would not dare to try and those who dared would be physically prevented from getting there.
In 1975 Arthur Scargill explained it all. Writing about the 1974 miners' strike, he said:
The only worry I had was that the T &amp; G were not recognising our picket lines in two places and arguing that they had contractual arrangements with the firms concerned. My retort was that they had a contractual arrangement far above that, they had a contractual arrangement with the working class and if they didn't honour that contractual arrangement we'd make sure, physically, that they did, for we would have thrown the lorries and everything else into the dyke.

Mr. Skinner: The Minister has made a number of allegations about what happened at Silverdale this morning. Is it not clear from the very keen observations of miners, and thankfully the one video that has been shown, that many police undercover agents are infiltrating the picket lines? Therefore, what evidence has he that all the misdemeanours that he referred to have not been carried out—[Interruption.]——

Mr. Speaker: Order. Has the hon. Gentleman finished?

Mr. Skinner: No, Sir.

Mr. Speaker: The hon. Gentleman must not make a speech. He should finish his question.

Mr. Skinner: I shall, when the Tory hooligans have stopped baying. What evidence does the Minister have to show that any of the things to which he referred have been done by miners? As Home Secretary, he should be ashamed of himself for using the smear tactics that he has just used.

Mr. Brittan: If the hon. Gentleman seriously believes that policemen were throwing obstacles under the hooves of police horses, he lives in an even greater world of fantasy than I expected.
There is no doubt that in the early days of the dispute intimidation seemed to be likely to pay off. A prominent leader of the Nottingham National Union of Mineworkers was reported to have said, after the Nottingham NUM executive ordered the miners to strike briefly until its ballot had been completed:
The Yorkshire pickets won the day by intimidation … We did not want a blood bath.
There can also be no doubt of the firm and settled desire of thousands of miners in Nottinghamshire and elsewhere to carry on going to work. Faced with the clear intent of the militants to bring all pits to a standstill by force and the equally clear desire of thousands of miners to go on working, the country had a clear choice, and still has that clear choice: either to allow the Notts coalfield and many others pits to be closed by force, or to take firm action to uphold the rule of law and to allow workers who want to go to work to do so.
I believe that in a democratic society governed by the rule of law there could be only one answer. If one group of workers could impose physically its will on others and prevent them by force from exercising their lawful right to go to their workplace, freedom would have become a dead letter in the land.
The House is entitled to ask the Opposition a question which they have never answered: do they accept that right to go to work or not? If they do not, or are in any way equivocal about it, they are saying that physical power should triumph over individual rights. To say that is to advocate anarchy and to betray democracy. If they do not say that, then the only question becomes a practical one: how are the rule of law and the right to go to one's workplace to be upheld?
Of one thing there can be no doubt. If pickets are allowed to assemble in large numbers intimidation is likely. The purpose of peaceful picketing is to communicate and persuade. Can anyone seriously think that if hundreds of pickets congregate at a pit entrance and try to block it they are doing so simply to engage in peaceful persuasion? Why are hundreds of people needed for that purpose?

Mr. Michael Welsh: rose——

Mr. Brittan: The Attorney-General has stated clearly in a written answer what the law is:
If pickets by sheer numbers seek to stop people going to work, they are not protected by the law since their purpose is to obstruct rather than persuade.

Mr. Welsh: I understand the point that the Home Secretary is making about mass picketing. He was implying that there is nothing wrong with peaceful picketing. I visited a picket line a week ago last Thursday, and the police would not allow a peaceful picket of six. The rest would have withdrawn and gone home to bed. I visited three different pickets where conditions were the same. I asked the police if they would allow just four pickets and told them that I would ask the rest to go home. I wanted just four pickets to stand there and speak to the Nottinghamshire miners, but the police said that none of them would be allowed to stand there.

Mr. Brittan: If the hon. Member considers that the restraints imposed by the police on the number of pickets were excessive in any case, he is entitled to make that

complaint in the courts in the usual way. The courts will determine that issue on the basis of the evidence before them in the case. One thing that is clear from the examples that I have given is that the prospect of mass intimidation was almost inevitably likely to lead to violence. The evidence is overwhelming that that is the case. There is a duty on the part of the police—not just a right but a positive duty—to ensure that those who want to go to work can do so.
That raises a second question. If mass picketing is inherently likely to cause violence, how is the number of pickets to be kept down to prevent such intimidation? If the police allow large numbers from to assemble and then try to control them, let alone disperse them, violence and bloodshed are bound to ensue.
Let us not forget that in 1972 it was numbers alone that forced the closure of Saltley coke depot. If the police are to prevent vast numbers from building up and creating intimidation in that way, they have to use the pre-emptive powers which, as the Attorney-General has made clear, they have under the common law to prevent a breach of the peace. As he said,
there is no doubt that if a constable reasonably comes to the conclusion that persons are travelling for the purpose of taking part in a picket in circumstances where there is likely to be a breach of the peace, he has the power at common law to call upon them not to continue their journey and to call upon their driver to take them no further." — [Official Report, 16 March 1984; Vol. 56, c. 279–80.]

Mr. John Morris: Has it not also been said by the courts that the reasonable belief that the constable must have is that a breach of the peace is imminent?

Mr. Brittan: It is indeed the case that the courts have said that the constable must have a reasonable belief that there is likely to be a breach of the peace. If in any case the person who is challenged thinks that that belief is unreasonable, he can take the matter to court and test it there. What is more, that argument was put plainly before the court when there was a complaint about what happened at Dartford tunnel, and the court did not grant an injunction in those circumstances.

Mr. John Morris: The Home Secretary must know well that in the Dartford case there was an application for an injunction. That is a discretionary remedy. The main action has to be pursued in the future. It is a wholly different matter.

Mr. Brittan: The hon. and learned Gentleman is quite right, and the court decided not to exercise its discretion.
By preventing coachloads and carloads of pickets from gathering in huge numbers—and only by doing that—the police have been able to ensure that those who wish to work can continue to do so. It is, of course, disgraceful that that should have to happen. Of course it is bound to mean disrupting ordinary traffic. But there can be no doubt that if that were not done the ugly intimidation that we saw only yesterday and today would achieve its unlawful purpose within a matter of a few short hours.
The truth is that the action of the police has been remarkably successful. All miners who want to go to work have been able to do so. When I made my statement to the House on 15 March, in the wake of events at Ollerton, only 29 pits were working normally, and the plan was for them to fall one by one like dominoes. Now 46 pits are working normally because those working at them want to carry on working.
The police have performed a difficult task in difficult circumstances. They deserve the gratitude and admiration of this House and the whole country.

Mr. Robert Atkins: Has my right hon. and learned Friend seen The Guardian of yesterday, under the byline of its most distinguished political editor, in which the right hon. Member for Manchester, Gorton (Mr. Kaufman) is described as taking a dossier on "heavy policing" to the chief constable of Nottinghamshire, and as having come back saying that his report would be a great deal more favourable than either he or his colleagues expected? As The Guardian put it, the right hon. Member
emerged saying that the chief constable had agreed to examine several of the allegations, and conceding that he was clearly acting without political direction of any kind.
Are not the Opposition guilty of some synthetic theatricalism in trying to present the police as not doing their job?

Mr. Brittan: It was a matter not so much of theatricalism as of extreme embarrassment.
It is precisely because the police have been so successful in enforcing the right of people who wish to go to work to do so that they have come under attack. Those who were determined to bring the coalfield to a halt by violence were horrified to find that the forces of law and order had proved too much for them. As they could not beat the police, they have sought to discredit them by a campaign of denigration.
None the less, as I said at the outset, if there is any allegation of improper conduct on the part of the police, every such allegation must and will be fully and properly investigated. However, some of the allegations that have been made relate not to specific actions of individual policemen but to police procedures generally.
Reference was made by the hon. Member for Barnsley, West and Penistone to the arrangements for the communication of information. They were arrangements which had been in operation for years, activated by the president of the Association of Chief Police Officers and not in any sense by me, and providing for co-operation sought by one chief constable from his colleagues.
Exception has been taken also to the use of police officers in plain clothes. The purpose of that is simple and wholly legitimate: it is to enable the police to identify those who are engaged in or threatening violence. Officers doing that are in no sense agents provocateurs.

Mr. Geoffrey Lofthouse: rose——

Mr. Brittan: If there were any suggestion that the officers were actually instigating the commission of an offence, that would be a very different and serious matter which would require careful investigation. No evidence of any such behaviour has been presented to me or to the police.
The central issue before the House is a simple one.

Mr. Lofthouse: rose——

Mr. Speaker: Order. The Secretary of State is not giving way.

Mr. Brittan: All of us either want the law of the land to be upheld or not. The law of the land is clear. Those who want to go to their workplace have a right to do so and the police have a duty to enable them to get there.

Mr. Lofthouse: rose——

Mr. Brittan: I have four simple questions to ask the Opposition today. First, do they agree that those who want to go to their workplace have the right to do so? Second, do they deny that mass picketing is intended to take away that right by force? Third, do they think that that right should be upheld? Fourth, if they think it should be upheld, how on earth could it be upheld except by police action of the kind that we have been seeing? The House is entitled to clear answers to those questions.
Ritual and generalised condemnation of violence will not be sufficient. The time for smears and sarcasm is over. It is time to speak up for those whose only sin is to choose to go to their workplace, and for those whose sole duty is to protect them as they do so.

Mr. Gerald Kaufman: We welcome the debate — [Interruption.] — and I congratulate my hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) on having obtained it. I congratulate him as well on his impressive speech in introducing the debate. Such an adjective could not be applied to the lamentable contribution that we have just heard from the Home Secretary. [Interruption.]
The proper functioning of society depends upon the maintenance of law and order, and the Opposition strongly support the police in the proper use of their powers to uphold law and order. We believe that when men and women wish to go to their workplace they must be free to do so—provided, of course, that Government policies make it possible for them to have a workplace to which to go. We believe that if attempts are made forcibly to prevent people from going to work, they have the right to the protection of the police, and the police have the duty to provide that protection. We know that in Nottinghamshire in recent weeks the presence of the police has often been welcomed by local residents.
That is my response to the right hon. and learned Gentleman's challenge to me. Will he join me in condemning any excesses by the police?
If the police have a duty to assist men who wish to go to work, other workers have the right to seek peacefully to persuade their fellows not to go to work. Over recent weeks there has been an attempt to imply that all picketing is somehow wrong. It has been implied, too, that even an intention to join a picket line is evidence of an intention to commit a breach of the peace. Peaceful picketing is a civil right and it is important for our democracy to uphold that right. Those who deny others that right are themselves undermining democracy.
Although under the Employment Act 1980 secondary picketing is potentially a civil wrong, provided it is conducted peacefully it is not a criminal act. Workers have the civil right to take part in secondary picketing providing they are willing to accept the risk of civil action. Many of the difficulties of the past few weeks have arisen because the interpretation by the police of their duties has clashed with the pickets' assertion of their rights — although some of those affected by police action were not even pickets. The power of arrest has been used amply, and no doubt in some cases justifiably. About 800 arrests have taken place. In case after case, the power of arrest has been used excessively.
A witness named Jean Blackburn gave this example:
I saw Neil Wilkinson of Houghton Main Colliery arrested on the picket line at about 4.30 am on Friday 23 March. He was


complying with the police instruction that 2/3 people could stand near the gate and speak to Notts miners as they came through for work. His voice was one of the 2/3 which shouted up as a miner went through, and all he said was 'support your union'. He was immediately set upon by two policemen and carted off in the van.

Mr. Eldon Griffiths: rose——

Mr. Kaufman: I shall give way to an hon. Member who speaks freely and is not paid to say what he says.

Several Hon. Members: rose——

Mr. Speaker: Order. If the right hon. Member will not give way, hon. Members must not persist.

Mr. Nicholas Fairbairn: On a point of order, Mr. Speaker.

Mr. Speaker: Order. No point of order can arise on what I have just said.

Mr. Fairbairn: On a point of order, Mr. Speaker. If the person cited in the case by the right hon. Gentleman has been charged, it is quite improper to give witness evidence, because the matter is sub judice.

Mr. Eldon Griffiths: On a point of order, Mr. Speaker. The right hon. Member for Manchester, Gorton (Mr. Kaufman), for whom I have some regard, said that he would
give way to an hon. Member who speaks freely and is not paid to say what he says.
He was referring specifically to my connection with the Police Federation, of which the House and you, Mr. Speaker, well know. Like the right hon. Member for Cardiff, South and Penarth (Mr. Callaghan) who was also the spokesman for many years before he became Prime Minister, when I speak——

Mr. Speaker: Order. Will the hon. Gentleman come to the point of order?

Mr. Griffiths: I ask that you, Mr. Speaker, request and require the right hon. Gentleman to withdraw the unparliamentary imputation that when I speak in the House, I do so in any way other than freely and as I judge to be right, without reference to the Police Federation or any other organisation.

Mr. Speaker: I hope that we can continue to debate with calmness, as we have done so far. All hon. Members know of the hon. Gentleman's interest, as it is declared in the Members' Register of Interests. The hon. Gentleman may have the opportunity later to make a speech.

Hon. Members: Withdraw.

Mr. Kaufman: If the helmet fits——

Sir Kenneth Lewis: On a point of order, Mr. Speaker. The position is becoming serious when an hon. Member who has an interest that he has declared is charged by another Member, because of that interest, with not speaking freely. Hon. Members can speak freely, although they have interests, provided they have declared them.

Mr. Speaker: I shall clear the issue. The right hon. Member for Manchester, Gorton (Mr. Kaufman) will agree that every hon. Gentleman declares his interests in the register and speaks impartially. We should not impute dishonour to each other.

Hon. Members: Withdraw.

Mr. Kaufman: It goes without question that I accept what you say, Mr. Speaker.
I shall continue to give examples that the House should hear. Mr. Steve Golding of 2 Cross street, Langold, Worksop, Notts shouted:
Ought to be ashamed of yourself for working".
He was arrested at 8 pm—the police refused to say why — and held until 11 am the following day. He was refused a telephone call to his mother and told that that had been taken care of. His mother was knocked up at 3.30 am and told that he was in gaol.
There was the ludicrous but nasty case of the arrests at the Dock and Duck public house in Old Clipstone, Nottinghamshire, involving Mr. Russell Williams of 3 Tennyson road, Bentley, and two others. They went out to picket, but were turned back and then arrested in the pub where they went to play darts. They were taken to the cells, fingerprinted, detained for three hours and then released with apologies from the senior officer.
There have been allegations that some police action has been violent or callous. My hon. Friend the Member for Barsley, West and Penistone referred to the case of Mr. D. Stubbins of Woolley branch who, on 27 March, at Newstead colliery suffered the effects of an angina attack and needed medical treatment. The police officer refused him access to the colliery's medical centre, despite requests from local union officials in Nottingham and the pit manager. Mr. B. Walker, the Newstead branch secretary, and the nursing sister at the colliery can give evidence to that effect. Mr. Stubbins was allowed into the medical centre only after repeated requests from the pit manager.
A few days ago my hon. Friend the Member for Pontefract and Castleford (Mr. Lofthouse) and today my hon. Friend the Member for Barnsley, West and Penistone referred to the allegations about political questioning. The men were asked how they voted in the last election, how they would vote if there were only Conservative and Communist parties in the country, for whom they voted as president of the National Union of Mineworkers, how much union subscription they paid, the name of the organiser of the strike centre at Kellingley, what newspapers they read, whether they read the Morning Star, and so on. I have the names of 19 men, which I shall readily provide to the House if hon. Members so wish, who were subjected to such questioning.
Pickets and miners who refused to strike took exception to those tactics. Mr. T. S. Upton of 30 Lawnwood avenue, Elkesley, wrote a letter to the local press. It reads:
As a mineworker still working at Bevercotes Colliery, I am getting increasingly worried at the activities of the Police force in Nottinghamshire although I respect the right of any member of the public to attend his place of work, and I have been thankful to the Police for getting me through the Pickets when things have got out of hand.
It has got to the situation where we are being issued with identity cards by our union (for our own protection).
I have been stopped by the Police from lawfully talking to the pickets at the colliery entrance when there were only 10 pickets and about 130 police.
On Sunday night whilst travelling on the A1 I was stopped twice and asked to produce identification.
On the Monday afternoon shift I was stopped from going into the colliery premises by some eighty police and was asked to produce identification. They also refused my request to stop and talk to the 'TWO' Pickets who were on the entrance.


This police activity is seen by an increasing number of my workmates, both in my union and the NUM, as being more intimidating than the actions of the 'flying pickets'.
There is a special concern because people who were not pickets and had no intention of picketing have had their freedom of movement violated. Mr. G. D. Hampson of 8 North street, Warsop Vale, describes how he tried to take three friends to Ollerton for job interviews at Mansfield Hosiery Mills, how he was stopped several times by police and eventually not allowed to proceed, how his passengers were not allowed to get out of the car and take a bus or even walk and how, accordingly, they missed their job interviews. Nor was Mr. Hampson allowed to take them another day. As he says in a letter:
I cannot take them because I have been warned that if I travel that road again either on my own or with passengers during the dispute I will be arrested.
Then there is the case of Father Marshall, the vicar of Goldthorpe parish church. He had gone along with some of his parishioners to see what was happening on the picket line. [Interruption.] I hope that the country will note that Conservative Members laugh at the fact that a priest wanted to see what was happening on a picket line. They were stopped by police on the A1 at Blyth. The driver of the car in which Father Marshall was travelling said to the police, "Do you honestly believe we are going picketing with a priest?" The officer said, "That dog collar does not mean a thing to me. It could be a miner in disguise." It seems that that police officer has seen Joe Orton's "Loot" once too often.
I am not contending that these and many other questionable incidents are the result of a general policy by the chief constable of Nottinghamshire. As may be within the knowledge of the House, I had a 90-minute meeting with the chief constable on Saturday, with my right hon. Friend the Member for Mansfield (Mr. Concannon) and my hon. Friend the Member for Battersea (Mr. Dubs). That meeting was extraordinarily inaccurately reported by The Guardian, a newspaper for which I have great regard and for which I like writing, but which ought to ring people to check the facts. I hope that that will not ruin my next assignment.
I thanked the chief constable for the courtesy with which he received my colleagues and myself. When I put to him some of the examples that I have given to the House, he said that he could not rule out that they had happened. There are well over 5,000 police from many forces currently involved in this exercise. Although they are all under Mr. McLachlan's command, they are not all under his control. It is essential that the chief constable exercises firmer control over those men and that they maintain at all times the good name of the police.
One aspect of the policing operation does seem to be a general policy, and a new and questionable policy at that. It is the stopping and in some cases turning back of travellers at great distances from their destinations.
My hon. Friend the Member for South Shields (Dr. Clark) complained about one such incident and was told in a letter from the assistant chief constable of Northumbria:
The coach was stopped by my officers because, at that time, miners were moving in coaches from various parts of the country towards the Nottinghamshire coalfield, where breaches of the peace had occurred.
The officers anticipated further breaches of the peace occurring if such a group of miners were allowed to continue on their way to Nottinghamshire and it was therefore necessary to seek evidence regarding their destination and intentions.

That was 100 miles away from where they were seeking to go.
There was also the case of the Kent miners who set out to go not to a colliery, but to the Yorkshire miners' headquarters at Barnsley—nearly 200 miles away. They were stopped at the Dartford tunnel, instructed not to proceed, and told that if they did proceed—I have the affidavit—they would be arrested and charged with an offence. They complied, turned away and decided instead to travel by the Blackwall tunnel, which they did without hindrance.
We have the bizarre situation in which miners travelling through the Dartford tunnel are potential criminals, whereas the same miners, with the same intention and the same destination, are pure as the driven snow, provided they go through the Blackwall tunnel.

Mr. Brittan: The right hon. Gentleman will know that he has characteristically given a highly loaded account of that episode. He referred to an affidavit, but he knows that the evidence put forward on behalf of the police is in a contrary sense from what he has put to the House as if it were uncontroverted.
The right hon. Gentleman knows that the evidence put forward by the police, which will be an issue at the trial of this matter, is that there was no stopping of the miners and telling them that they had to go back. They were warned that if they did go on to Nottinghamshire, they might find that they were stopped there.

Mr. Kaufman: Believe it or not, Mr. Speaker, that was intended to be a confutation of what I had just said.
The Home Secretary, in reply to my right hon. and learned Friend the Member for Aberavon (Mr. Morris), referred to the hearing before Mr. Justice McNeal and seemed to suggest that the Kent miners were defeated at that hearing. Far from it. Mr. Justice McNeill declined to rule either way on the point and based his decision on the narrower ground that damages were an adequate remedy. He said that he was not satisfied that the balance of convenience favoured stopping the police action in advance of the damages action. That was as far as he went.
The New Law Journal on Friday, referring to the sort of incidents that I have been describing, said:
There is no doubt that the police action in stopping flying pickets a long way from the scene of any potential breach of the peace breaks new ground. The statement of the Attorney-General supporting the legality of such action must be regarded, in the light of the decided cases, as representing a somewhat optimistic view of what the courts might hold … the police … cannot claim to be acting in defence of the rule of law, for the law does not guide them to a clear conclusion in these circumstances.
In fact, the Attorney-General seems to have adopted a new attitude, because, after making what was purported to be a definitive statement on picketing law in 1980, he was questioned by the hon. Member for Boothferry (Sir P. Bryan) who asked:
Will my right hon. and learned Friend explain to the House the position under the law of an individual or organisation that actively organises disorder by assembling pickets by the busload and directed them in such overwhelming numbers to a site that disorder is bound to follow?
The Attorney-General replied:
That is a problem to be dealt with by police at the site." —[Official Report, 19 February 1980; Vol. 979, c. 242.]
The Attorney-General said in 1980 that it was a matter for the police on the site. Now he champions the right of the police to take action, possibly hundreds of miles from the site, when the conditions on arrival at the site cannot possibly be known.
My right hon. and learned Friend the Member for Aberavon put it authoritatively——

The Secretary of State for Wales (Mr. Nicholas Edwards): That makes a change.

Mr. Kaufman: My right hon. and learned Friend has a good deal more authority than the Secretary of State for Wales, whose ignorance on any subject is paralleled only by his ignorance on any other subject.
My right hon. and learned Friend the Member for Aberavon said:
What has highlighted the concern is the stopping of miners many hours, and sometimes even hundreds of miles, away from the area they are aiming for with the intention of picketing.

Mr. Martin M. Brandon-Bravo: rose——

Mr. Kaufman: My right hon. and learned Friend continued:
How can a police officer believe in those circumstances that travelling miners are likely to be in breach of the peace? The eventual circumstance may be entirely peaceful. There may be no breach of the peace at all. The burden on the police before they activate their powers is that they must have reasonable belief that there is likely to be a breach of the peace. The courts have said that the belief must be that a breach of the peace would be committed in the immediate future by the person arrested. I will be surprised that the test of immediacy could be satisfied in the courts in the case of potential picketers hundreds of miles and several hours away.

Mr. Brandon-Bravo: rose——

Mr. Roger Gale: rose——

Mr. Kaufman: My right hon. and learned Friend continued:
The courts have also said that the officers' contemplation, must be based on facts of 'a real possibility and not a remote possibility that a breach of the peace would be committed. Every case must be decided on the exact facts.
A failure of the law is at the heart of the predicament faced by the police in the dispute. In 1980 the Government put through Parliament an Employment Act that was intended to deal definitively with secondary picketing. It was laid down that where such picketing was alleged to be taking place an employer would have recourse to the courts and be granted an order stopping what was demonstrated to be unlawful picketing. Let it be clear that, under the Employment Act 1980, secondary picketing——

Mr. Tony Marlow: rose——

Mr. Kaufman: —is a potential civil wrong, but not of itself a criminal act.
Last year Mr. Eddie Shah availed himself of that law and the result was turmoil. Since then, employers have been very chary of activating the legislation. The National Coal Board was granted an injunction on 14 March, but, as the Daily Telegraph reminds us today, it hurriedly changed its mind and backed away.
The general attitude of employers is that they want nothing to do with the Employment Act. A survey published only yesterday showed that 84 per cent. of management regard any mention by the courts as generally unhelpful to industrial relations. The problem is that, although employers are wary of stepping in, the police have been pitchforked into the gap.
When I met the chief constable of Nottinghamshire on Saturday he told me that his instructions to his men were

to permit picketing within the law. However, although secondary picketing may be a wrong under civil law, picketing, whether primary or secondary, is no violation of the criminal law provided that it is not violent, obstructive or intimidatory. Yet there is clear evidence that the police at pit gates are under directions to distinguish between primary and secondary pickets when, under the criminal law, there is no such distinction.

Mr. Brittan: Does the right hon. Gentleman think that the presence of 2,000 pickets at a pit is or is not intimidatory of itself?

Mr. Kaufman: I do not know what is wrong with the right hon. and learned Gentleman. If he had listened to what I just said, he would know that picketing is no violation of criminal law, provided that it is not violent, provided that it is not obstructive and provided that it is not intimidatory.

Mr. Brittan: Will the right hon. Gentleman give way?

Mr. Kaufman: No, I shall not give way.

Mr. Brittan: Will the right hon. Gentleman give way?

Mr. Speaker: Order. The right hon. Member for Manchester, Gorton (Mr. Kaufman) has not given way.

Mr. Kaufman: I shall give way to the Home Secretary.

Mr. Brittan: My question is simply whether the right hon. Gentleman agrees that the presence of 2,000 pickets is bound to be intimidatory?

Mr. Kaufman: I must echo the refrain of the right hon. and learned Gentleman to all of my hon. Friends who intervened by saying that that is a matter for the courts to decide.
Section D of the picketing code of practice issued under the Employment Act 1980, in paragraph 28, categorically states:
The police have no responsibility for enforcing the civil law.
The words "no" and "civil" are printed in italics in the code.
The problem is that a civil code has become de facto an adjunct to the criminal law and that de facto the police are enforcing civil law in order to fill a gap caused by the reluctance of employers to use an Act about which they are apprehensive. The police have been placed in an intolerable dilemma. It has led to many actions that I am sure they wish they had not had to take or had not taken. The resulting position was described as follows:
It does appear to the public that the police have imposed a kind of curfew on the community as a whole, not just the miners, and also that they have restricted free movement.
These features are things we normally only associate with countries behind the Iron Curtain, and I would not wish anyone to feel we are changing the style and pattern of policing in this country.
The writer continued to say that he was worried that the police were getting
the image of a heavy-handed mob stopping people from going about their lawful duties.
The man who said that was Mr. James Anderton, the chief constable of Greater Manchester, who is not noted to have the softest velvet gloves in the business. The position about which he was concerned arises from Government policies and laws that have been foolishly forced through the House by the Government. But what do Ministers have to say?
The Minister of State, Home Office—the right hon. Member for Whitney (Mr. Hurd)—put it this way:
there are individual incidents which may have been dealt with in the right way or in the wrong way.
With such meticulously selected words, the right hon. Gentleman has demonstrated that his talent lies more in drafting diplomatic notes than being embroiled in the rough world of policing.
The Home Secretary has no such inhibitions. He goes around positively relishing any opportunity that he has to make matters worse. At the weekend he talked about what he called "smears of the week" and sweepingly dismissed the allegations. He asserted that there is no undercover police operation, although he repeated this afternoon that it was wholly legitimate.
This morning I received a report of a Nottinghamshire police sergeant, Mr. R. A. Lake, whose full address I have. It was alleged that Sergeant Lake had been on plain clothes duty in recent weeks posing as a miner. My hon. Friend the Member for Battersea immediately asked the Nottinghamshire police to investigate the allegation on my behalf. The deputy chief constable has admitted that Sergeant Blake was, indeed, on a plain clothes assignment during the relevant period.
The Home Secretary has been playing an irresponsible and inflammatory role. He discredits the high office that he holds, because he and the Prime Minister wish to exploit the present delicate situation for partisan purposes.
The police have a most important role to play in our society in combating the record crime wave. Britain's serious crime has increased by 30 per cent. under this Government. The role of the police is not to act as a surrogate for an Employment Act that has become increasingly inoperable. The position is not of their making, and the solution is not in their hands but in those of the Government.

Mr. Jerry Hayes: rose——

Mr. Kaufman: The Home Secretary would do well to take to heart the wise words of Mr. Kenneth Oxford, the chief constable of Merseyside, who recently said:
The traditional system of policing in this country is firmly established on the principle of policing by consent, rather than coercion: police forces are not an arm of the state but servants of the community whose confidence they must secure.
Among many people today that confidence has been eroded. It is essential that it be re-established. In the end, that can be achieved only by a change of course by the Government who are responsible for this whole sorry mess.

Mr. Mark Carlisle: We have all listened to what might be described as a typical speech from the right hon. Member for Manchester, Gorton (Mr. Kaufman). It was a typical speech in what has so far been a somewhat strange debate. We heard it trailed for several days and demanded as a matter of urgency so that we might hear how the police are undermining civil liberties and affecting the rule of law, only to have it opened by the hon. Member for Barnsley, West and Penistone (Mr. McKay) who went out of his way to claim that he was not attempting to attack the police and in whose mouth it might be said that butter could not possibly melt. I must tell him, however, that whatever he might say about his

attitude to the police, the only possible interpretation that can be made of the motion is that the police are undermining civil liberties and the rule of law in Britain.
Today and recently we have heard a succession of complaints about individual incidents of misbehaviour by the police from the right hon. Member for Gorton. Of course I hope that no right hon. or hon. Member would attempt to justify or condone the police if they were shown to have acted beyond their powers, but the right hon. Gentleman knows full well that he should pursue individual complaints with the police and not use unsubstantiated complaints to undermine them.
The motion refers to civil liberties and the rule of law. I remind Opposition Members that Britain imposes on the police a duty to uphold the law and to enable people to exercise their civil liberties. One of those fundamental civil liberties is the freedom to exercise the right to work. It is vital to those who wish to work to be free to do so. If the debate has achieved one thing, it has achieved the right hon. Gentleman's grudging acceptance that that is so. I hope that we can take it from his speech that he condemns what he and the rest of us have seen on the picket lines recently and that he commends the police on their work in allowing people to go to work if that is their wish.
We have witnessed a deliberate and concerted attack by a group of people who have chosen not to work to try to prevent others from going about their lawful duties. If men choose not to strike themselves into what they perceive as the dole queue but rather to work to protect the future of their industry and their jobs, they should be free to do so. It is the duty of the police, acting on our behalf, to see that they have that freedom. The alternative is stark. The only alternative is anarchy and the negation of democracy as we know it.
My right hon. and learned Friend the Home Secretary referred to Saltley power station. I was a junior Minister in the Home Office when it was closed. It was a sad clay for Britain. I am glad that, over the years, the police have learnt, through experience, to cope with the problems of picketing, mass picketing and violent picketing. The motion refers to the effect of police operations on civil liberties and the rule of law. It would be disastrous for civil liberties and the rule of law if the police were to fail to preserve the right of people to work.
We heard the right hon. Member for Gorton talk as though the police were interfering with the right of individuals to picket peacefully. Is he really so naive as seriously to believe that that which we have read in the newspapers and seen on the television news recently is merely the manifestation of a desire of people peacefully to persuade others not to go to work? Has he thought for a moment of what happened yesterday, as my right hon. and learned Friend reminded him, at Cresswell colliery and at Babbington colliery? Does he really believe that what happened there are examples of attempts to persuade others from going to work by peaceful means? I often wonder why, if it is the police who behave so badly, it is always the poor police who seem to end up with the injuries.
The hon. Member for Barnsley, West and Penistone talked as though something new was happening in Britain. It has for many years been the right of the police to ensure that pickets do not create or threaten breaches of the peace. It has for many years been upheld by the courts that numbers can amount to intimidation. It is abundantly clear


that if people travel to take part in a picket that is likely to be the cause of a breach of the peace, the police have the power to call on them to stop that journey.
Whatever the right hon. Member for Gorton might say, we are not concerned with the law of 1980, or the law of 1982, or the code of conduct, or any changes that have been made. We are concerned with the criminal law, with upholding it and upholding the rules laid down by it on which the freedom of every person in Britain depends. It is that which it is vital that the police defend.
I am sorry that the Leader of the Opposition, who was recently here, has gone, because I debated with him across the Dispatch Boxes for some two and a half years. He was always strong on oratory but rather weak on substance. He was always high on rhetoric but rather lacking in judgment. I believe that, should he ever, regrettably, achieve that to which he aspires, he will strongly regret his unwillingness and inability in the past few weeks to condemn what has been seen as going on in the strike and his failure outspokenly to stand up for the right of people to work and their freedom to go to work without intimidation.

Dr. David Owen: As was utterly predictable, this debate has put the police force in the dock here in Parliament. Many people will think it odd that, five weeks into a major dispute, the issue that Parliament debates first is the conduct of the police. It is deplorable that the two Front Benches, conniving as they have throughout the dispute to avoid a debate, have allowed the police to be the focus of this debate.
The speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman) emphasised what I fear many of us have begun to suspect for some time—that the Labour party is now entrenched in a stance of hostility to the police. It would be dangerous and damaging if the polarisation of British politics ever reached the point at which the police could be identified with either of the old political parties. The police are fully aware that it is fundamental that they represent every citizen in the country. If anybody should be in the dock in this debate it should be the president of the National Union of Mineworkers, Mr. Scargill, and Mr. McGahey and, if there is any accomplice to the situation that we face, it is the total silence from the Leader of the Opposition and the hon. Members who speak in the House on this issue for the Labour party. The situation has been going for some time. In January and February 1979 it was not possible to bury the dead in this country. That and some of the other impossible industrial disputes that took place at that time are signs that the Labour party is no longer capable of having a rational discussion about the action of responsible trade unionism, or of irresponsible trade unionism.
It is the right of anyone to picket, of course. The peaceful picket is built into the civil liberties of the country, and we would not be a true and proper democracy if it was not possible for somebody to persuade somebody else to strike. That ought to be clearly and unequivocally stated.
As the debate has revealed, of course the police have made mistakes. It would be a strange thing, with that number of police coming in from different parts of the country, some of them very inexperienced, and, indeed,

some coming from as far away as the Devon and Cornwall constabulary, if they were not to make some mistakes. I do not wish to comment personally, since the case concerning the Dartford tunnel is to some extent still before the courts, but, if it turns out that the police turned away people, rather than confining themselves to warning people that, when they approached the pits up in Nottingham, they might be turned round, I believe that they would have gone way beyond what most people would expect to be a proper use of their powers. I do not think there is much doubt that some policemen have asked questions of miners about their political affiliations that ought not to have been asked. There may be other incidents. The dossier, about which we have heard so much from the right hon. Gentleman the Member for Gorton, may well prove to have some elements of truth in it.
However, the fundamental statement that needs to come out of the House is that, despite intense provocation, hour after hour, day after day, there is no other police force in the world that could have shown such restraint as has been shown around the pits. Without resource to riot equipment or to riot clothing, the police have been able, broadly speaking, to command the respect of everyone. I believe that in most other countries we would have seen a very different picture. The fact is that, if one goes to Nottingham and Derbyshire, one finds a great many miners and miners' families who are grateful to the police for the protection that they have been able to experience over the last few weeks in order for them to be able to work.
I hope that that voice, that word and those sentiments will come from this side of the House. It ought to do so, because there has always been, among many of the mining community, the greatest respect for the police and for the rule of law. We in the SDP have many political contacts and votes in mining constituencies. The Labour party may think that only its members can speak for mining communities, but there are other hon. Members who may catch your eye, Mr. Speaker, who represent mining constituencies, such as the Chief Whip of the Liberal party, and there are Conservative Members who represent mining communities in the House. If it were true that only the Labour party was the authentic voice of the average miner in the country, everybody would be out on strike, no pits would be working and no areas of the NUM would have voted democratically to work. The situation is fraught and tense. One of the difficulties that the police have faced is that they are having to separate out the dispute between miners. They are having to separate out the problems that have arisen on and around the pits, because those who have taken a democratic decision not to vote in Nottingham are being subjected to intimidation, not by miners in their own county, but by miners from across the border in Yorkshire. The problem is that those who asked for area voting have not been prepared to accept the democratic judgment of those areas that decided that they did not wish to strike. It would have been just wrong for the Nottingham miners to go into Yorkshire or for the Yorkshire miners to go into Lancashire.
The Scargill tactic of getting areas to fall like dominoes has effectively worked against itself, and the dominoes have not fallen. When the dominoes did not fall through the democratic process, they had to achieve a breakthrough by intimidation. The only obstacle to achieving a breakthrough by intimidation has been the


police force. It is the police force that is now up front, and where is the Leader of the Opposition, and what has he been saying over these last few weeks? If ever I saw a pitiful example of leadership, it is that represented by the Leader of the Opposition.
I say this to the Prime Minister. Last night she spoke on television. Why does she not come to the House, and why does she not listen to a single part of this debate?

Mr. Orme: Where were you last week?

Dr. Owen: It would have been a good thing for the House if the Prime Minister and the Leader of the House had listened to the debate, and heard the kind of debate into which it has inevitably developed.
The most serious problem that has been raised by the strike is whether we are moving towards a new type of policing. In the organisation of the police, which has had to call on resources from many different police forces, are there the beginnings of a national police force? I believe that many hon. Members would profoundly object to any move towards a national police force.
I spent this morning talking to the chief constable who is the president of the Association of Chief Police Officers, and who is in charge of the national reporting centre, to which the right hon. Gentleman the Member for Gorton referred. The more I look at the way that the centre operates, the more I believe that it does not represent a move towards a national police force. Indeed, I think that, if the centre did not exist, when the country is faced with crises such as the present one, the call would come for a national police force.
I am satisfied that the president for his year of office is always a chief constable from outside London. I hope it will never be the case that the head of the Metropolitan police, although he is a member of the Association of Chief Police Officers, is made the president. This would be unwise. I have questioned whether the centre need be sited within Scotland Yard, as I had thought that there were some benefits in having the office out-posted. On balance, given the communication links that have been established for a variety of reasons, I decided that this was necessary.
I do not think that there is anything sinister about the way in which the national reporting centre has operated. Indeed, it has been in operation since 1974. It has been called into action on four occasions. The first occasion was the mining dispute in 1974. It was next called into action on an occasion when the police had to provide prison cells, and it was called into action during the Toxteth riots, and the papal visit. It has, therefore, been demonstrated that the centre deals with a whole range of issues, and not just industrial disputes.
It is a pity that the Home Secretary did not develop his explanation on this question. The House was told about it by his predecessor in a debate in 1981. The more that we know about the operation of the centre, the more confidence I believe people will have that we are not moving away from the well-tried procedure of accountability to the police being held locally. I do not believe that we should go much below the current number of 43 police forces covering England and Wales, and Northern Ireland.
The Home Secretary made a fair speech. However, the right hon. and learned Gentleman must be very careful about making allegations about what took place last night

in Derbyshire. I hope that those who went round marking the doors of miners' houses were not miners, or connected with the mining industry. As yet, I do not think that there is any evidence that those responsible are associated with the mining industry. Such behaviour would be very atypical and would be condemned by miners' leaders regardless of their politics. We would all deplore such intimidation. However, that part of the Home Secretary's speech seemed to move a little closer towards making unsubstantiated allegations than the rest of it. Nevertheless, something undoubtedly happened last night, and it shows the ill-feeling that is beginning to develop.
I hope that one message that comes out of this very unfortunate debate rings clear—that the House is not prepared to make the police the scapegoat for the crisis. I hope that there is not a Division at the end of the debate and that the hon. Member for Barnsley, West and Penistone (Mr. McKay), who opened the debate in a reasonable way, will not seek to divide the House. However, if there is a Division, my right hon. and lion Friends will vote in a way that will clearly signify——

Mr. Martin Flannery: The SDP are Tories.

Dr. Owen: I shall vote not for the Tories but for the police. I shall vote that the House continues with its business——

Mr. Ashton: With the Tories.

Dr. Owen: I shall not vote with the Tories. Let us have no such nonsense. I hope that some Labour Members will at least abstain and that they certainly will not vote for the motion. If they vote for it, they will have demonstrated what a shabby, sordid exercise the whole thing has been.

Mr. Jonathan Aitken: I am glad to speak after the right hon. Member for Plymouth, Devonport (Dr. Owen), because I agreed with many of his fundamental points, and not least with his basic proposition that the debate reveals a shameful sense of parliamentary priorities. We are debating a motion that seeks to put the police, if not under attack, at least under a most critical and unfriendly spotlight. We have neglected many of the more basic issues that are hinted at in the motion. It refers to civil liberties and rights, but there are much more important civil liberties and rights at stake in the dispute. The right to work is a civil right and liberty, just as the right to vote in a national ballot connected with one's livelihood and the right to go peacefully to one's place of business or work are also civil rights and liberties. It is a terrible condemnation of Opposition spokesmen that they should have completely ignored such rights and liberties and should have concentrated on the civil liberties that may—although I do not think so—be under threat as a result of police action during the dispute.
The opening speech of the hon. Member for Barnsley, West and Penistone (Mr. McKay) was characteristically moderate, but that of the right hon. Member for Manchester, Gorton (Mr. Kaufman) was much more slippery and characteristically offensive. As I listened, I was reminded of a passage from the Mikado opera when one character says to another, "What is journalistic licence?", and the other character replies:
Journalistic licence is a mass of corroborative detail giving an air of verisimilitude to an otherwise bald and unconvincing narrative".


Today, the Opposition Front Bench treated us to a bald and unconvincing narrative. It was a mosaic of individual anecdotes that did not add up to a convincing or coherent picture of what the police are doing. Of course, it is possible and, indeed, probable that policemen have sometimes made mistakes. It would be quite extraordinary if they had not done so.
However, as I represent a constituency that containes many Kent miners, I should like to deal with one incident in which it was alleged that the police made a mistake. I refer to the treatment by the Kent police of Kent miners at the Dartford tunnel. The incident took place largely on Sunday 18 March. During the previous three or four days, we had seen some of the worst scenes of violence in Nottingham, and the chief constable of Nottingham had appealed to other police forces for help and mutal aid in preventing further outbreaks of violence. On Sunday 18 March the chief constable of Kent stationed about 20 police officers at the Dartford tunnel. They stopped about 50 cars as a result of what the police call "common-sense observation". The hon. Member for Battersea (Mr. Dubs) laughs, but he only reveals his own lack of common sense. One of the major factors that led the police to stop the cars was that they were displaying NUM stickers.
The chief constable of Kent quite properly told his officers to advise potential pickets not to travel further. However, no one was prevented from leaving Kent, or arrested when doing so. I believe that the chief constable of Kent was right to say that the police action was both reasonable and within the law.

Mr. Ron Lewis: The hon. Gentleman said that the police were within the law. Is he aware that last Thursday night, after a Division, when I was on my way home in a car driven by my son, we were pulled up by the police twice? Is that not an infringement?

Mr. Aitken: Neither I nor any other hon. Member could comment on such an individual case. If the hon. Gentleman or any other hon. Member, or any miner, has a justified sense of grievance, he is perfectly entitled to lodge a complaint against the police under the established procedures.
In a statement issued explaining the police action, the chief constable of Kent, referring to the stoppings outside the Dartford tunnel, said:
Our action"——
that of the Kent police—
in this case is no different from the advice a senior Kent Officer gave recently to football fans leaving Dover to travel to the continent where again breaches of the peace were feared.
I do not remember the Opposition condemning police officers for giving advice to football fans before breaches of the peace occurred. Therefore, the criticism of the Kent police is not justified.
However, I understand the point made by the right hon. Member for Devonport. I think that he expressed something which I also feel—a faint feeling of unease that any citizen of our country should be stopped on the highway as part of a deterrent policing operation. I somehow feel that it is an un-British state of affairs. It is something that we should strike a warning note about. It is only possible to stand aside and not take it too seriously because of the exceptional circumstances produced by the exceptional events in and around the coalfields.

Mr. Stuart Bell: Is the hon. Gentleman saying that he will vote against the Police and Criminal Evidence Bill on Report?

Mr. Aitken: I am saying no such thing. I am trying to make a serious speech on a serious issue.
There is one other aspect of police activity that causes me mild concern. About 170 officers from the Kent police force are now in the midlands. Similar numbers of police officers from forces all over Britain, and particularly from the South, are deployed in the mining areas because of the request made by the president of the association of Chief Police Officers. I am worried that we shall see the beginnings of something approaching a national police force if such policing continues for any length of time.
One reason why the British police have been so much more successful than the French police is that the French police are regarded as being the face of the state, whereas the British police tend to be regarded as the face of the community. The sooner we can return, as normality allows, to community policing by local police forces, the better. I shall then be caused less unease by the extreme measures that have had to be taken in extreme circumstances.

Mr. Brandon-Bravo: Does my hon. Friend acknowledge that the Nottinghamshire constabulary has involved one third of its entire force in the dispute, leaving two thirds to cope with the rest of normal policing? Given that enormous work load, does my hon. Friend agree that it is reasonable to allow the chief constable to call upon the assistance of his colleagues?

Mr. Aitken: I accept that. We have an exceptional situation on our hands and exceptional measures are required. However, I do not minimise the argument by the right hon. Member for Devonport who fears that if the dispute continues indefinitely we could move towards a form of national policing, which is undesirable.
In the long term, I should prefer a greatly strengthened, better trained form of special constabulary from a local community to moving great phalanxes of police from one end of the country to the other. I hope that some lessons will be learnt nationally from the present position which must give rise to anxiety, although one cannot legitimately criticise any police policy in relation to the strikes so far.
Our barbs should be reserved, above all, for the president of the National Union of Mineworkers, Mr. Arthur Scargill, who is doing more than anyone to damage and destroy civil liberties and rights. He is no trade union leader in the accepted sense of the word. His major priority is not the welfare of his members, but political revolution. He proves that every day. Mercifully, the good sense of the British working man shows signs of triumphing, despite the bad leadership of the NUM.
According to the Press Association a few hours ago, over 20,000 miners are at work today — the largest number since the dispute began and 700 more than yesterday. The miners are voting with their feet against their irresponsible and Marxist leadership.
We are sent here not just to pass laws, but to preserve liberties. The first liberty that we can preserve is to allow the miners themselves — by the ballot box and their individual judgment — the right to work, which they deserve.

Mr. Terry Patchett: I am grateful for the opportunity to speak, and I recognise the need to be brief. I should like to clear up a matter in relation to the contribution by the right hon. Member for Plymouth, Devonport (Dr. Owen). I do not intend my contribution to be an attack on the police, but the right hon. Gentleman implied that the police should never be questioned. I find that worrying. I am anxious about the infringement of civil liberties, since they are the cornerstone of any democratic society.
I am not sure how unique I am in the House, but I have experienced being on a picket line. Like many miners, I never intended to do anything but peacefully picket. However, I was struck and assaulted by the police on at least one occasion for no reason whatsoever. Let no one try to whitewash the problems. I am aware of the frustrations felt and the taunts made by both sides. Apparently the public are not aware of taunts by the police during the dispute.
In 1972 I was based in Norwich organising over 1,000 pickets in East Anglia. The organisers had daily telephone conversations with senior police officers. We were asked how many pickets were going to each place. That peaceful working relationship lasted throughout the 1972 dispute and it was recognised and honoured. It was successful, and peaceful picketing occurred. The same relationship existed during the 1974 dispute.
Then came the aggressive determination by the Tories to dismantle the trade union movement and destroy its influence. The dispute comes as no surprise to me, because it has been manufactured over many years by the Government through their trade union legislation and picketing laws. The Government are even attacking the recipients of DHSS benefits, knowing that the trade unions cannot afford to pay £15. That is what puts trade unionists' backs up. Many more vindictive actions have taken place, culminating in the closure of Cortonwood colliery which precipitated the dispute. Neither I nor other trade unionists are fooled by what is happening.
My right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) referred to Father Marshall of the parish of Goldthorpe. He is a constituent of mine with whom I have discussed the case. After two or three ladies from his congregation expressed concern that two young men, who had never before been in trouble with the police and had never intended to see the inside of a police station, had been arrested, Father Marshall believed it to be his parochial duty to observe exactly what circumstances had caused two such honourable young men to be arrested. If a man of the cloth believes that simple step to be his duty, he should be free to take it.
Father Marshall contacted the local Barnborough NUM branch secretary, Mr. Allen Hale, who had misgivings. He would not let Father Marshall travel with the pickets, and he escorted him himself. They arrived at Checkpoint Charlie on the A1 at Blyth. Father Marshall tells me that the police tone to the branch secretary was aggressive until they recognised Father Marshall's collar, and then the tone changed. The branch secretary made his position clear. He said that he was taking Father Marshall to look at the Nottinghamshire coalfields and the activities on the picket line. Only when Mr. Hale asked the father to get out of the car did the police notice his collar, and then their tone changed. Allen Hale has been told that he must not be seen

in Nottinghamshire again and the reverend father is not too sure of his position. He was happy with his treatment., but is distraught that in this day and age in Great Britain he could be stopped that way.
My next example involves Mr. Wayne Lingard, who lives in my constituency. A friend of his was arrested on the picket line, so he left the line and went to a public phone booth to let his friend's wife know that he would be late home. As he was dialling, a police officer opened the door. Mr. Lingard said, "Excuse me, but I am making a private telephone call." The officer replied, "I suspect that you are ringing for more pickets to be brought to Yorkshire." He said, "I am not ringing for pickets. It is a private telephone call." The officer's retort was, "If you are doing nothing wrong, there is no need for privacy." That was in a public telephone booth. [Interruption.] It is all right. I do not want their assistance. I want the public and the press up there to see just what their attitude is.

Mr. Speaker: Order. The hon. Gentleman knows that there is no public anywhere but here.

Mr. Patchett: I am sorry. I believe that right hon. and hon. Members opposite are making clear what they think in a serious debate on the infringement of civil liberties.
The subject of telephone tapping has already been mentioned. I can only tell the House what I was told— that a telephone conversation took place from the Yorkshire miners' strike headquarters and a deceiving message was given out that three coachloads were going to a given spot. They were quite happy to send a carload of pickets to go along and laugh at the numbers of police who suddenly appeared at the given spot. One can only conclude that someone had leaked something, and there is very serious suspicion.
I appeal particularly to Government Back Benchers to think seriously about the subject of this debate—the infringement of civil liberties—and about how far down this road they are prepared to go in their bitterness against the trade union movement. Are we really going to allow this democracy to be run in this way? I hope that these serious questions can be answered. Unfortunately. I feel that some will be masked, because under the pressure of incidents at the time——

Mr. Patrick Cormack: rose——

Mr. Patchett: No. I am sorry, but I am finishing now.
Under the pressure of incidents at the time, these men, who are not familiar with police routine, are not taking the required details. They are inexperienced. They did not intend to get across the police. I therefore ask Tory Back Benchers in particular to think about the road down which their party is taking them.

Mr. Eldon Griffiths: I approach this debate much more in sorrow than in anger, because I grew up in a mining community, my father was a police officer and I can remember from childhood the extremely warm relations between the police service and the mining community. I believe that warm relationship remains and I hope that after all this madness is behind us it will be restored.
Secondly, I am saddened that, after a period in which we have seen masses of men moving from one part of our country to another and using violence against their fellow workers, the House should be concentrating its attention


not on those who have caused the violence but on those who are trying to contain it; not on those who break the law but on those who are trying to uphold it. I find this, as I come to the 20th anniversary of my arrival in the House, a sad occasion.
The right hon. Member for Manchester, Gorton (Mr. Kaufman)—whose personal offence to me I pass by— made a speech that contained a number of charges. I say to him, from knowledge, that nearly all the things he complained of—the stops on the motorways, the central co-ordination of mutual aid, the use of plain clothes officers, and the rest—were all taking place with the knowledge, though not of course the authority, of Ministers in the Government of which he was a member. There is no change in the tactics, operations or command system of the police service.
The right hon. Gentleman had a dossier of specific charges, which no doubt will be noted by those police officers who are attending this afternoon, who will want to pursue his allegations—as indeed they should. But surely he ought to recognise that most of the matters on which he touched could well become matters for disciplinary proceedings, could quite properly go to the Police Complaints Board and quite likely in some cases could end up in the courts. I beg leave to doubt whether it is a proper use of the House to offer partial comments on specific matters that may be justiciable, identifying names, as if there were incontrovertible proof, without there being any opportunity for those against whom these charges are made to answer them. For that reason, too, I approach this debate with sorrow.
The main charges that have been made over the past few weeks against the police service are very clear: first, that the police are enforcing the Government's trade union law—this is Mr. Scargill's allegation; secondly, that the police are engaged in political policing; thirdly, that they are engaged in paramilitary action; and, fourthly, that we are in the presence of a move towards a national police force. I shall comment on all four of those charges. Not one of them is true. Each one of them, whether this is intended or not, has the effect of undermining the morale of the police service and of impairing the confidence that I believe the vast majority of our fellow citizens have in the police.
In reply I say first on behalf of the Police Federation —in which I am proud to declare an interest—that the police deeply resent being likened by public figures to the police forces of Poland or of South Africa. I have visited over the past 10 days Derbyshire, south Yorkshire and south Wales—although I have not sought to milk from my visits the same political advantage as the right hon. Member for Gorton—and I have found that the facts are very different from the impression projected by the media. In the vast majority of contacts between police and the mining community relations have been good. In some cases miners' wives have brought food to the police, who are living in the most difficult circumstances, in cold and miserable barracks. Members of the police have also been invited by miners into their homes and, in some cases, down the pits, and are said to have exchanged cap badges for miners' lamps.
I think this is entirely in character, because most of those police officers are the sons or brothers of people in those communities—and long may this remain so. In

any case, the police are not there seeking a clash. They are there to defend the right of those miners who wish to go to work to do so. I have seen letters of thanks from the wives of miners to members of the police force recognising the service that they have provided. That is the reality in nine cases out of 10—the relations remain very good.
But, of course, there are a number of disturbing cases; I recognise that. I concede that mistakes can be made and I now deal with the four main allegations.
The first is political policing. This is not true. The police are not applying the Government's trade union laws. Those laws are largely a matter for civil, not criminal, proceedings and I know of no policeman who so far has been involved in any way in those civil proceedings. What the police are applying is the ordinary criminal law, and it is that law which makes it an offence to use violence against one's neighbour. If a constable, or indeed any one else, has reasonable grounds for believing that any other person is by his conduct likely to cause or to aggravate a breach of the peace, then, no matter who or where that suspected offender may be, it is the constable's duty, under his oath of office, to intervene and if necessary to make an arrest, and he is subject to discipline if he fails in that duty. Whether that arrest is justified—and it is an arguable matter—is a question exclusively for the courts. Anyone, be he picket, demonstrator or football fan, has an absolute right to challenge the propriety of that arrest. And if it is judged by the court to be unjustified, the police -will face the consequences.
So let no one be in any doubt that the powers that the police have used, and are using, whether in Kent or anywhere else, have nothing to do with trade union laws. Those powers have long existed under the common law and they are necessary if freedom is to be protected.

Mr. Lofthouse: Does the hon. Gentleman agree that, following an arrest, it is not the duty of a police officer to ask political questions about a person's political allegiance?

Mr. Griffiths: I do not wish to prolong my remarks, but perhaps I should answer that question. There are occasions when there is good reason to believe that some of those on a picket line offering violence are not miners, but others who have joined in the dispute. One of the simple ways—it may be an unwise way—in which an ordinary copper in south Yorkshire may try to find out whether a person has nothing to do with south Yorkshire or mining, but is there for his own extremist purposes, is to say, "If you are from south Yorkshire, which MP did you vote for in the last election?" [Laughter.] Hon. Members may laugh, but I shall explain that remark. South Yorkshire Members representing coal mining areas are well known in the area. So miners are well able to answer that question. Those who cannot do so might be thought to be intruders from other areas. I do not say that that is the best way to approach the problem; I seek only to explain how it can happen.
A second criticism of the police relates to paramilitary policing. The movement to Nottinghamshire of thousands of police is alleged to have been a paramilitary operation. What, then, is the organised movement of thousands of pickets and others from one area of the country to another? There is something paramilitary about that operation, too.
I agree very much with the right hon. Member for Plymouth, Devonport (Dr. Owen) that, despite the picture


projected in much of the media, the level of violence so far has been relatively small. Nowhere in the world would such a major dispute have been policed with the same methods of restraint and persuasion as have characterised most of the police operations during the past month. Those who allege paramilitary policing should ask themselves where have been the water cannon, the gas charges and all the other apparatus of paramilitary policing used in other countries. The British police have placed their bodies between the pickets and civil peace. They have taken the knocks and the bruises——

Mr. Flannery: And the pickets.

Mr. Griffiths: Many hundreds of police, some well known to me, have taken the most severe bashing from the front. But what hurts more are the attacks from the rear made upon them in this House. Paramilitary policing is an absurd allegation.
I turn to the allegation that we are moving towards a national police force. The right hon. Member for Devonport, who had the wisdom to visit the president of the Association of Chief Police Officers at the National Reporting Centre, has disposed of that allegation. When help is requested by one force area of another, it is a request and not an instruction. We are a long way from a national police force. I can see nothing in the dispute that has brought that nearer. I too shall always resist a movement towards a national police force.
To conclude, some people—not many—want the police to be broken in this struggle. They know that would be the first step towards the demolition of the parliamentary democratic system that all in the House honour. There may be only a few who seek this. but I have no doubt that there are some. Therefore, it is incumbent on anyone who comes to the House and seeks to move a motion that attacks the British police to ask himself what would happen to our democracy and our freedom if the police should lose. The essence of our democracy is the rule of law and in standing for that law the police deserve the support of the House.

Mr. Merlyn Rees: The hon. Member for Bury St. Edmunds (Mr. Griffiths) is right to talk of the historically close relationship between miners and the police. Many of the police in west and south Yorkshire are the sons and daughters of coal miners.
It is not new to bring police from outside into areas on strike. It happened in 1910, 1911 and 1926. At that time it was felt that the police in the area would be too friendly with the colliers. I am not arguing that that is why that has happened this time, but I accept that there is that close relationship.
The hon. Gentleman referred to the police attempting to discover whether a person came from south Yorkshire. During my 25 years in Yorkshire, I have realised that there are so many gradations of accent from Leeds to Sheffield that one can almost tell from which village a person comes. It is not necessary to question which way a person votes. If someone said that he voted Communist, he would be telling lies because the Communists hardly gained a vote in the Yorkshire area——

Mr. Alex Woodall: Not many voted Tory either.

Mr. Rees: There is as curious a circularity in our politics as we will find anywhere in eastern Europe.
I wish to take up the point raised by the right lion. Member for Plymouth, Devonport (Dr. Owen) and the hon. Member for Bury St. Edmunds about what I regard as a worrying move in the structure of the police—not only during the past three weeks, but in my day — independent of who has been Home Secretary. I wish to make a few suggestions about what a Home Secretary should be doing now.
For those who argue that there is something wrong in this debate, I must tell them that I am fed up with reading in the newspapers, through the scissors and paste reports, about what is happening in the coal areas. This is the place where we should have discussed this matter a long time ago. It is sad that it was not debated because it was believed that the debate would not stick to the point and that we would all engage in the usual Oxford Union general election-type politics with which the general public are fed up to the teeth. It is right that we should discuss this problem here today so that we can clear the air.
I am the son, grandson, great-grandson and great, great-grandson of a coalminer. Indeed, one of my great, great-grandmothers worked as a coal miner. I am proud of that—[Laughter.] I hope that no one is laughing at that, because that is true. I am as proud of that as of the period that I spent in the Royal Air Force. Those who come from the suburbs of London should understand that there is something about being a coal miner that marks him out as being quite different from those who board an underground train every working day and face the danger only of getting their coat caught in the door when they arrive at Trafalgar square.
I am proud of my mining ancestors but I do not believe in my country right or wrong, and nor do I believe in my party right or wrong. Equally, I do not believe in miners right or wrong. If miners break the criminal law, it is right that they should be dealt with by the law. None of my hon. Friends who were miners have said anything that conflicts with that view. Miners, like other trade unionists, have the right peacefully to picket. I wish that that remark had produced more cheers. We hear many cheers when someone argues that the right to picket does not exist in Poland. Others have the right to work if they wish to do so, and therein lies the role of the police.
I had a close daily involvement with the police for a period which began in March 1974. They have a difficult job and that becomes even clearer when one talks to their wives. They have a rotten job to do, especially when they are on duty at a football stadium or at any other large public gathering.
The police are not pigs or Fascists, and I am not going to say that they are merely because I happen now to be in opposition. Mass denigration of the police is as daft as mass denigration of trade unionists, who are often called Marxists by those who know only of Groucho Marx. The police are civilians in uniform, and I did not like to see them marching as I watched television recently. That is not what our police should do. Chief constables who get their police officers to wear mess dress, for example, are allowing police colleges and that sort of atmosphere to change slightly the nature of the police, of which I am extremely proud.
If I am prepared to criticise coal miners, the Royal Air Force, or anything else, I am prepared to criticise the


police as well when they do something wrong. They should not be exempt from criticism. It is sometimes felt that if criticism is made of them something is wrong and the criticism should not have been made. I have heard the views of the Police Federation at Scarborough and the views of flying pickets who travelled 200 miles to undertake their picketing. It is right to add that those pickets were not arrested. There are always bad eggs in every organisation, and there are some bad eggs in the Police Federation.

Mr. Eldon Griffiths: That is right.

Mr. Rees: I learnt from my experience in Northern Ireland that politicians should distance themselves from the police. That is certainly true when it comes to interpretation of the law and operational control. The Home Secretary is not a Minister of the Interior. He has a vague responsibility for about 44 police forces, but that responsibility does not extend to Northern Ireland or Scotland. The more that that part of his responsibility is broken up, the better. When I was Home Secretary I became involved in lengthy correspondence with the right hon. Lady who is now the Prime Minister. In January 1979, the right hon. Lady said:
The Home Secretary should be giving advice on the present grievous difficulties.
I replied:
I have no power to instruct chief constables. That is what I said yesterday, and I repeat it. The right hon. Lady is wrong." The right hon. Lady continued:
Will the right hon. Gentleman give the chief constables advice by means of a circular?"—[Official Report, 16 January 1979; Vol. 960, c. 1529–1530.]
The correspondence between the right hon. Lady and myself was directed to whether a Home Secretary should advise chief constables. The Home Secretary should not advise anyone on policing. Individual chief constables of smaller forces should take decisions and they are responsible to their police committees. Incidentally, those committees will disappear in the metropolitan counties.

Mr. Gale: Does the right hon. Gentleman accept that the visiting police in Nottingham were there at the invitation of the local chief constable?

Mr. Rees: I shall come to that. I want to know under what part of the Police Act 1976 that was done. I want to know also whether the Prime Minister still holds the view that she expressed in 1979 and whether any advice has been given by the present Home Secretary, the Home Office, or any other Minister to the police. It has been alleged that the right hon. and learned Gentleman has held a meeting with the chief constables. I was advised strongly in the spring of 1979, at a time of industrial disputes, that I had no power to ask the chief constables to come together, and that if I asked them to do so to discuss the issues arising from the disputes, I would be acting "wrongly". Against the background of talk of a national police force, I want to know whether matters have been left entirely to the chief constables, or whether they have been told that something different must be done because of the Saltley incident and the events of six years ago.
I am concerned about violence. I do not want to see miners fighting miners and no miner whom I know wants that either. It must be realised that if young police officers are brought into an area and live in the equivalent of

barracks, the events and the reaction that we have heard about during the debate will be almost inevitable in the rotten, nasty situation of some picketing.
I have kept the forms which were in my desk when I was the Home Secretary, on which are set out the powers that I had over the police. They amounted to precious little. However, the Home Secretary can
direct a chief constable of any police force to provide any other police force with such constables or other assistance it appears to be expedient in the interests of public safety or order.
If the Home Secretary had done that, he would have been well within the law. Was it done that way, or was it left to an ad hoc arrangement with ACPO at Scotland Yard?

Mr. Dick Douglas: Get up and answer.

Mr. Rees: I am concerned that the events of the past few months, along with other events over recent years, have taken us along the road to a national police force. It is not what the federation says that matters and it seems that what we say in the House does not matter. Daily events may be leading us in the direction of a national force. If discussions took place, I am sure that we would say that we did not want such a force. Perhaps the time has come for a Royal Commission to direct itself to the police and to follow up the work of the 1960 Royal Commission, which led to the introduction of legislation in 1963, including the Bill which was the first measure in which I played a part in the House. That Bill found Its way on to the statute book in 1964.
I accept unreservedly from the Home Secretary that telephones have not been tapped. However. I have not liked the partisan role of the right hon. and learned Gentleman. Of course he should condemn violence, and any Home Secretary who fails to do so is not worth his salt. However, his job is not to question those of us who are concerned about what we read. He should realise that we are dependent upon what we read in the newspapers. That is so, even though we write in our diaries when we leave the office, "Never believe one word that appears in a newspaper." However, the newspapers appear every morning and we find ourselves asking whether they have presented us with the truth. That is why we are right to question Ministers in this place.
I had great respect for one of the Home Secretary's predecessors, Mr. Reginald Maudling — [HON. MEMBERS: "Come on."] I had great respect for him. He advised the chief constables to meet the miners' leaders. He sent them a telegram to that effect. That should be done now.

Mr. Robert Atkins: How can you talk to Scargill?

Mr. Rees: The Home Secretary should be doing what Emlyn Williams and the chief constables have done in south Wales and what the chief constable has done in west Yorkshire. He has gone to the power stations and said, "Lads, you can have pickets here. I do not care what numbers you have but it is going to be quiet. I won't bring in other police if the picketing is conducted on that basis." A man who knows the area can do that sort of coppering.
The present dispute will eventually come to an end, but I suggest to the Home Secretary that it might be a good idea to try to get talks under way instead of dealing in images. We are all aware of the reports that appear in the newspapers and we all have our views on certain individuals. It is against that background that the right


hon. and learned Gentleman should realise that talks are required and that we should not hype up the dispute with talk of victory for one side or the other. We should use this debate to air the problems and, when it is over, think hard and do something to cut the dispute down to size. It is doing the nation great harm. The miners have a case. For goodness sake, let us talk to them.

Mr. Michael Knowles: As I am from Nottingham, I speak with a special interest. I have noted carefully what some Labour Members have said and the terms in which the debate has been initiated—the implications for civil liberties and the rest—but I ask Labour Members to accept that my constituents and those of my hon. Friends also have civil liberties.
This is not just a question of people being stopped on motorways. We are talking on behalf of people whose towns and villages have been invaded. It has been called peaceful picketing. In fact, rioting mobs have descended on places where people want to work. Some of the charges that are having to be brought by the police against some pickets are, frankly, hard to believe for those who know the industrial midlands and the north.
I suspect that many of those who have done much of the damage are not miners, and I am not the first to make that point. Some have said that they are interlopers, and when the full story comes to be told we shall find a lot of truth in that.
Yesterday, accompanied by several colleagues, I spoke to the chief constable of Nottingham and asked whether he had asked for or been given help. He told us, as he had stated before his police authority, that he had asked for assistance. After the first few days, especially early in March, and particularly at Ollerton, his force was being pushed against the barriers. For how long can policemen be kept on the streets for 12, 16, even 18, hours a day? He had to call in policemen from elsewhere. He had no choice.
In the towns and villages of Nottingham, those policemen—our own police force and outsiders who had to come in — have received massive public support. They have not been on the receiving end of peaceful picketing. It has not, even in a fairly aggressive way, been a question of putting a point across, and we appreciate that miners are not always total gentlemen in discussing matters one with the other; hard words can be exchanged. But when it comes to women and children on the streets being affected—that has happened on occasions—that is an entirely different matter.
The hon. Member for Barnsley, West and Penistone (Mr. McKay) said that he had never seen so many police. The nation has never seen so many pickets. Yesterday at Babbington there were 2,000 pickets to fewer than 200 miners going down on shift. Was it necessary to have 10 pickets to persuade every miner? That was some persuasion. Standing between them were 30 policemen, six of whom were injured. That is what this has been about and that is the way in which the people of Nottingham see it.
The hon. Member for Barnsley, West and Penistone said that the police should be even-handed. I have never taken the view that the police should be even-handed between the burglar and the householder, or, in this case, between those who come to wreck an area and those who

live there. The hon. Gentleman said that it was no joke to be fingerprinted and arrested. I agree. It is no joke to have one's town torn apart, either.
Many general allegations have been made. For example, the right hon. Member for Manchester, Gorton (Mr. Kaufman) made a point about cases, having said that he had met the chief constable of Nottingham over the weekend. I know that the chief constable gave him a pledge that if he sent him the details of each of those allegations they would be investigated. The police have no interest in a cover-up in that respect. It does not do their credibility any good to cover matters up, and they know it. The police want the details and that is why it is no good simply our discussing the issue in this Chamber. The chief constables must know all the details so that they can take the necessary steps.
The right hon. Member for Gorton then referred to an undercover police operation, and there has been talk of agents provocateurs. The police have made no secret of the fact that they have used plain clothes policemen in this operation to get round the back of the crowd. They are after two kinds of people there—those throwing bricks and bottles over the heads of those in front and the organisers, because in many cases even some of those who come to picket are innocents, loyal to their union and their class—[HON. MEMBERS: "Shame."]—and their loyalty is misused. They are ending up in the hands of the police. We know that there are people organising behind the scenes, some of them sitting in offices in Barnsley. We know the truth about the strike, and there is no point in being mealy-mouthed about it.
One wonders why the Labour party has brought the subject up in the way in which it has been raised today. The implication is bound to be that it is a vote of no confidence in the police. Disguise it how Labour Members will — stepping daintily on eggshells through the minefield—that is the implication. The nasty reality is that the Labour party is still swinging to the left and the fear, among the Left-wing Members of the party more than among the few moderates still left, is that re-selection time is coming. [Interruption.] This is a nasty macho attack to preserve their backs and their general management committees.

Several Hon. Members: rose——

Mr. Speaker: Order. It may be helpful if I inform the House that the Front-Bench speakers intend to seek to catch my eye at 6.35 pm, which leaves 20 minutes for the remaining speeches. If hon. Members will confine their remarks to about five minutes each, that will be immensely helpful.

Mr. Ray Ellis: I shall heed your remarks, Mr. Speaker, and be exceedingly brief.
My only son was arrested last night at the pit head and forcibly detained. I accept that my son is as liable as anybody else to be arrested, and I mention that fact in passing simply to assure the House that I do not speak from hearsay.
The Parliamentary Commissioner, Sir Cecil Clothier, pointed out in his annual report that the worst evil the state could inflict on its citizens was wrongfully to take away their freedom. Unfortunately, that has become the daily practice in the coalfields of Britain. Hundreds of innocent


witnesses are being picked at random and are suffering the implied violence of forcible arrest, and are set free only under terms of curfew. We are living in a police state or under selective martial law —[Interruption.]—a law, moreover, that has not received its First Reading in this House. Perhaps it will never need to do so.
Conservative Members should be aware of the results of the Government's actions. It has been said on many occasions that the miners should hold a ballot. The rules are clear. They are not restricted reading, and I will happily make a copy of them available to the Minister. They say that all miners' ballots shall take place at the pit head.
I have not had an opportunity to see or speak to my son, but, according to this morning's newspapers, he and others have been given instructions until the middle of May to keep away from all premises of the National Coal Board and any premises picketed by the NUM except for purposes of residence.
According to the NUM rules, hundreds of innocent lads cannot vote until late May. — [Interruption.] Keep on going. The chances are that more miners will be picked up tonight and later. The NUM cannot legitimately hold a ballot, according to its rules, until all its members are available to vote. The Government's actions are behind that, and we should not forget it. The day that the Government use the police as an instrument of class warfare is the day when the House will not only come into disrepute but be disregarded.

Sir Edward Gardner (Fyle): It has come out clearly in the debate that no one seriously challenges the principle that the right to refuse to strike is as important as the right to strike. Miners in my native Lancashire, in Derbyshire and in Nottinghamshire who are refusing to strike and are determined to work are exercising a right that I hope the House fully recognises—the right to work.
The reason why the police are at the pit heads in such numbers has become clear from all that my right hon. and learned Friend the Home Secretary has said about the degree of violence experienced over the period of the dispute, and especially last night and this morning. There is no doubt that we see a distressing picture in a policy by people determined to intimidate by force and threat of force others to submit to their views by keeping them away from work. No one who has paid any attention to the facts that have come out in the debate can deny that the presence of the police was and is necessary. The police have a clear duty to prevent unlawful violence whenever and wherever it appears. Any other view must be an argument for anarchy.
Mr. Scargill, by refusing to allow a national ballot, gives a strong impression that he is happy to let loose the dogs of civil war in the coalfields. I do not wish to criticise the hon. Member for Barnsley, West and Penistone (Mr. McKay) for choosing this time to debate this subject. He seems to have no opportunity to do otherwise. He merely accepted the invitation of the Labour Front Bench. I see this debate—I believe that the country and the House see this also — as nothing more than a shameful and cowardly attempt to divert public attention from the essential serious and substantial issues of this conflict. I

hope that this will be realised in the country at large and that the Labour Front Benchers will feel ashamed of what they have done.

Mr. Tony Benn: This debate is long overdue. Most of the Conservative speeches have made no reference to the fact that this debate is about whole communities of miners whose right to work has been deliberately destroyed by the Government's edict. If the Home Secretary really believes that he is supporting the police, he should read the letter that appeared in the Sheffield Morning Telegraph last Friday, which stated:
As a former police officer, I am deeply concerned about the actions of the police. The fact that they openly harass miners, arrest them on the most trivial of excuses and are blockading large areas of this country appears significant in that they are following orders in the knowledge that they will be indemnified against counter legal action. This can only mean that they are under orders from the Government, and as such they have become the servants of the Government, no longer the servants of the people of this country …
The danger is that if the police are not restored to representing existing law, their actions will become the common law of the land.
The Home Secretary is shielding himself behind the police to cover up his own political responsibility, and that of the Prime Minister and their Cabinet colleagues, for the dispute that gave rise to this incident.

Sir John Biggs-Davison: Will the right hon. Gentleman give way?

Mr. Benn: I shall not give way because many other hon. Members wish to speak. I shall be brief.
The closure of the collieries was in breach of a well-established civil right, which has been accepted by previous Governments, that there would be proper consultation between the miners and the NCB. If one arbitrarily steals miners' jobs, one is responsible for the first denial of civil liberties.
Next, the legislation on industrial relations which has been introduced by the Government has been deliberately presented by the Government to make it look as though traditional methods of picketing are virtually criminal in character.

Mr. Brittan: indicated dissent.

Mr. Benn: It is no good the Home Secretary shaking his head because he has done his best to confuse people about criminal and civil actions. The intention of Government propaganda throughout this dispute has been to make it appear that those engaged in picketing methods which have been accepted for many years are guilty of a criminal act.

Mr. Peter Bruinvels: rose——

Mr. Benn: I shall not give way because I have only a few moments in which to make my point.
It is utter hypocrisy to say that the Government are defending the right to work when 20,000 miners have been denied that right by Government edict through Mr. MacGregor. If Conservative Members wish their views to carry weight with the public, they should go to a mining area in which mass closures are being announced. They should ask the miners — [HON. MEMBERS: "About the ballot."] I shall come to the matter of the ballot shortly. Conservative Members should ask the miners whether the


police will be available to allow them to go to work when Mr. MacGregor has closed their pits. It is odious and hypocritical to use that argument.

Mr. Geoffrey Dickens: How many pits did the right hon. Gentleman close?

Mr. Benn: The argument about the ballot is a matter for the NUM and will, no doubt, be discussed within the framework of that union. A Government who last Friday introduced legislation to remove Londoners' right to vote, and never permitted a ballot to be held at Cheltenham where they destroyed trade unionism by edict, and who now come out as the defenders of industrial democracy are odious and hypocritical.

Mr. Dickens: Will the right hon. Gentleman give way?

Mr. Benn: I shall not give way under any circumstances.
The Government appeared to have authorised the police who set up the road blocks. They authorised the mass police pressure and presence and authorised the police to harass the miners. The statement by the Home Secretary at the beginning of the dispute, when he listed the powers of the police, meant that in advance the right hon. and learned Gentleman authorised the actions of the police.
Despite the statements by my right hon. Friend the Member for Morley and Leeds, South (Mr. Rees), the former Home Secretary, about telephone tapping, I point out that there has been widespread telephone tapping. [Interruption.] If the Home Secretary doubts my word, he should look at what the former Home Secretary, Lord Whitelaw, said in his written answer on 25 February 1982. The guidelines issued to chief constables state that the authorising officer must satisfy himself that telephone tapping is operationally necessary, operationally feasible and justified in all the circumstances. The theory that Home Secretaries are required to authorise telephone tapping is untrue. [Interruption.] For the sake of Hansard, I had better report what the Home Secretary has just said. He said, "That is a lie." If he refers to his predecessor, he will find that assistant chief constables are allowed to authorise the interception of telephones, and he should not try to mislead the House on that.
I want to deal with the imposition of bail by magistrates. One of my constituents has been had up for obstruction. The magistrate imposed upon him, although he would not accept them, conditions of bail. They were that he was not to visit any places or premises other than own place of work, or any other premises associated with coal industry; and not to picket at any time any premises, place of business of the industry. He had not been convicted of anything. The police and the magistrates are working hand in hand to make possible the butchery of the mining industry.
In addition to the points that I have made, the Government have legislated to deny benefits to those who are on strike. Legislation provides that those who are on strike are deemed to have had £15 a week in strike pay. That is using the law to change the facts. One can say, "You cannot have starved to death; you are deemed to have had breakfast this morning." There is hardship now among many miners' families, and, in addition to taking away the right to obtain benefits, the Government have deliberately obstructed the claims. [Interruption.]

Mr. Speaker: Order. We all have to listen to things in the House with which we do not perhaps all agree. The right hon. Member has as much right to be heard as anyone else.

Mr. Benn: I am grateful to you, Mr. Speaker, because if we are to discuss civil liberties the right to eat is also important.
When I was in Chesterfield over the weekend I checked the figures. There were 3,900 applications for supplementary benefit, of which only 2,400 had been processed. Of those, 900 have been refused and 1,500 are awaiting payment. There is a strong suspicion that the Government have deliberately slowed down the DHSS arrangements to put financial pressure upon the miners.
I believe that the Government have brought the police tactics of Northern Ireland into the heart of Britain. That view is widely shared. In the process they have gravely damaged the relations between the public and the police. When talking privately to the miners, many local police officers have spoken of their dislike of the conduct of police brought in from other areas.
The charge that this debate has brought forward is that, above all, the Government have denied their responsibility for what has happened and, in a typically cowardly way, have pretended that they have come to the assistance of the police whom they sent in to deal with an industrial dispute for which the Government are 100 per cent. responsible.
What we have seen in this dispute is part of a much wider attack upon the freedoms of our people. The Prime Minister deals with those who dissent in a plain way. She will abolish local authorities that disagree with her and ban the trade unions at Cheltenham that disagree with her.

Mr. Dickens: rose——

Mr. Benn: I shall not give way, and certainly not to the hon. Gentleman.
The Prime Minister's attitude to dissent is to try to turn every political argument into a question of law and order. That has been attempted many times before. They had the army in Chesterfield twice, in 1893 and 1910, they had the police in 1921 and 1926 and those methods have never worked. Although the Government may believe that their method may succeed, in practice it will be rejected by the British people who have a much clearer idea of the importance of civil liberties than the Cabinet have ever understood.

Mr. Mark Robinson: Having heard the right hon. Member for Chesterfield (Mr. Benn) and his colleagues one would think that we were dealing with civil liberties from one standpoint only. That is far from the case. The debate this afternoon has been narrow. In recent weeks we have seen a divided National Union of Mineworkers. Many members of that union wish to continue working.
We have heard many cases cited by the Opposition of infringements of civil liberties, but when we are talking about their protection we must consider the rights of those miners who want to work. That is precisely what my right hon. and learned Friend the Home Secretary has been doing. We must also think of those industrial plants, for example the Llanwern steelworks in the Newport area, which depend upon indigenous coal and which run the risk of being the first to suffer in a dispute of this type.
What is at stake in this dispute is not just the right of miners to continue working, but the right of those plants, dependent upon the coal industry, to continue to receive supplies to enable workers in them to exercise their right to work.
During the dispute, as in any industrial dispute, incidents have been reported that have given those who wish ill to our police forces an opportunity to start the kind of hue and cry that has given rise to today's debate. If one ponders upon this dispute, it is a tribute to our police forces that a potentially dangerous situation has been carefully and sensibly handled within the context of the legal powers available to the police.
If the police act illegally, that is always, as has been reiterated this afternoon, open to challenge in the courts. The police have a duty to ensure that picketing is lawful and that those who wish to work, such as those in my constituency, can do so. It is a task that must be handled with skill and sensitivity. Surely the time has now come for the NUM to respond to the wishes of its members and call for a national ballot.

Several Hon. Members: rose——

Mr. John Morris: rose——

Mr. J. D. Concannon: On a point of order, Mr. Speaker. I represent an area where the atmosphere has been electric for the past three or four weeks. My constituents and the National Union of Mineworkers in Nottinghamshire will find it odd that I cannot put their views this afternoon.

Mr. Speaker: Order. I cannot have any more points of order. It takes time out of the debate. I am sorry that it has not been possible to call every hon. Member who wishes to speak. I warned the House at the beginning of the debate that many right hon. and hon. Members wished to take part. Hon. Members only have to look at the list at the end of the Chamber to see the amount of time taken by their colleagues.

Mr. Ashton: Further to that point of order, Mr. Speaker. Fourteen hon. Members have taken part but five of us raised the issue under Standing Order No. 10 and put on the pressure for the debate. Of those 14, not one has come from Nottinghamshire mining area and only two of those hon. Members who originally raised the issue have been called. We have heard a succession of lawyers and practically everyone who is not connected with the mining industry. What is the point in raising a matter under Standing Order No. 10 if we are not called?

Mr. Speaker: The answer to that is simple. The hon. Member's Standing Order No. 10 application was not granted by me. I warned the House at the beginning that this debate was on a narrow basis. It was connected with the police and civil liberties and the miners' dispute. That is why lawyers have been called.

Mr. Morris: My hon. Friend the Member for Barnsley, West and Penistone (Mr. McKay) has done a service to the House in raising the issue of civil liberties and the rule of law. We certainly recognise the difficult and frequently thankless task the police have. They come from our own communities and they do what they can, but

our appreciation of the police and our respect for the rule of law should not inhibit us from challenging wrong wherever it occurs.
I deplore violence on the picket line from wherever it comes. The rule of law is the same for everyone. Any breach of it, be it by picket or by policeman, justifies the spotlight of public scrutiny. This is the function of the House in peace, in war and in periods of industrial difficulty too.
This afternoon too many allegations have been made for any of us to be complacent. There have been allegations of the stopping of movement, of wrongful arrest, of violence and even of asking for political views. Men and women have the right to go to work. They have also the right peacefully to presuade others to abstain from working. Whether or not one is a picket, what is not allowed is a breach of the criminal law. It is the criminal law we are concerned with and not civil issues arising under employment legislation. The fear, as expressed by my hon. Friends, is that the police are being used as a handmaiden of the employment legislation.
One of the areas of concern is the setting up of no-go areas and, accordingly, the stopping of potential picketers hundreds of miles and hours away from the picketing areas. The police of course can take action to anticipate a criminal offence but the courts have said that the arrestor must have a reasonable belief that a breach of the peace would be committed in the immediate future by the person arrested, and that there must be proven facts for such a reasonable belief, and a real possibility of a breach. I ask the House: where is the belief of imminence hundreds of miles and hours away; what facts justify a conclusion that every picketer stopped and turned back will break the peace as opposed to picketing peacefully; how can mass action of this kind be justified so as to deny by law the right to congregate or to persuade?
Some years ago, when there was a proposal to have a no-go area for secondary pickets, it was said:
to stop everyone from entering a given area would mean creating areas where, if only temporarily, the right of passage along the highway and the right of free speech for the purposes of peacefully communicating and persuading no longer applied. Moreover, whatever the details of the proposal, it would again seem that the services of the police were being enlisted on behalf of the employer.
That proposal was rejected, rightly. The words I have quoted come directly from the Government's own Green Paper "Trade Union Immunities" of 1981. That was their view then and I hope it is their view now.
Hard cases hardly ever make good law. What we have heard in the debate must cause real concern. In the darker days of 1941 Lord Atkin said in a famous judgment:
One of the pillars of liberty is that in English law every imprisonment is prime facia unlawful"—
that means however short it is—
and that it is for a person directing imprisonment to justify his acts.
In a memorable passage he said:
In this country, amid the clash of arms, the laws are not silent. They may be changed, but they speak the same language in war as in peace … I protest, even if I do it alone, against a strained construction put on words.
What was true then is true today. The House must continue to maintain its vigilance to protect the rights of all citizens and to see that wrong, whenever and wherever it is caused, is properly dealt with according to law.

The Minister of State, Home Office (Mr. Douglas Hurd): It is only possible in the six minutes available to deal with one or two of the points which have emerged in this illuminating debate.
The right hon. Member for Plymouth, Devonport (Dr. Owen) was absolutely right in his analysis of the national reporting centre. We concur with his comments on that and with the comments of my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths). The national reporting centre fits absolutely into the pattern of policing based on local forces. It is not organised or inspired as a result of any desire for a national police force.
My hon. Friend the Member for Thanet, South (Mr. Aitken) was right to stress the local roots of our police. There will be occasions when the police themselves judge that mutual aid is necessary between forces. There will be occasions when the police need to co-ordinate that aid. That is the basis of the national reporting centre.
The right hon. Member for Manchester, Gorton (Mr. Kaufman) produced, as we expected, a number of allegations, untested, unproved. All hon. Members will recognise that it is inevitable that such allegations should fly around during the course of an operation on this scale. Those who make the allegations have two possible remedies. There is the remedy of the courts and the remedy of the complaints system which involves the independent Police Complaints Board, as was pointed out by my right hon. and learned Friend the Member for Warrington, South (Mr. Carlisle), whom we are delighted to see in his place. Those are the remedies provided by Parliament. They are being and should be used where serious grievances are put forward. What they cannot be used for is to investigate the kind of generalised nonsense in which the right hon. Member for Gorton has been indulging in growing desperation during recent days. The only thing one can say to the right hon. Gentleman is that he is far surpassed by the right hon. Member for Chesterfield (Mr. Benn) who, as we have just seen, lives in a world of imagined conspiracies which has only to be exhibited to be seen as absurd.
The right hon. Member for Gorton was given every opportunity to face the crux of the whole matter, and to condemn or even to comment on picketing in such large numbers as 2,000 at Babbington yesterday and 1,000 at Cresswell. He equivocated and denied once, twice, thrice, until we could almost have felt sorry for him if he had not been swallowing exactly the same medicine that he dishes out so lavishly to others.
The quarrel of many Opposition Members is not with the behaviour of the police, but with the fact that the police are in action at all. They do not really want a change in the behaviour of the police; they want the police to go away and leave them free to apply illegal pressure. Underlying the attack on the police is a dangerous assumption that we hear constantly in the House, that dealings between worker and worker should be somehow privileged, somehow above the law, and that intimidation can be ignored if it is the intimidation of one trade unionist by another.
That is bad law. What is worse, it is a doctrine absolutely poisonous to democracy and to the trade union movement. We wholly reject it. An individual who decides that he wishes to go to his place of work, and work there, is entitled to be protected from intimidation from

whatever source it comes—a point that was admirably made by my hon. and learned Friend the Member for Fylde (Sir E. Gardner).
The police will have to continue with their task as long as it is necessary. Of course, as many hon. Members have pointed out from their own experience, the police do not carry out that task with relish. There are many other duties which they would much prefer to be performing, as was pointed out by my hon. Friend the Member for Bury St. Edmunds. I do not think it has been mentioned so far in the debate that no fewer than 51 police officers have suffered injuries in this operation. However, the police are carrying out this task with patience, skill and courage. They are protecting one of the ancient and most important liberties of the citizen—his right to go about his lawful occasions in peace. The police deserve—and, so far as we are concerned, will continue to receive — our wholehearted support.

Question put, That this House do now adjourn: —

The House divided: Ayes 164, Noes 321.

Division No. 240]
[6.50 pm


AYES


Abse, Leo
Eadie, Alex


Adams, Allen (Paisley N)
Eastham, Ken


Anderson, Donald
Edwards, Bob (W'h'mpt'n SE)


Archer, Rt Hon Peter
Ellis, Raymond


Ashton, Joe
Evans, John (St. Helens N)


Atkinson, N. (Tottenham)
Ewing, Harry


Bagier, Gordon A. T.
Fatchett, Derek


Banks, Tony (Newham NW)
Field, Frank (Birkenhead)


Barron, Kevin
Fields, T. (L 'pool Broad Gn)


Beckett, Mrs Margaret
Fisher, Mark


Bell, Stuart
Flannery, Martin


Benn, Tony
Foot, Rt Hon Michael


Bennett, A. (Dent'n &amp; Red'sh)
Forrester, John


Bermingham, Gerald
Foster, Derek


Bidwell, Sydney
Foulkes, George


Blair, Anthony
Fraser, J. (Norwood)


Boothroyd, Miss Betty
Freeson, Rt Hon Reginald


Boyes, Roland
George, Bruce


Brown, Gordon (D'f'mline E)
Gilbert, Rt Hon Dr John


Brown, N. (N'c'tle-u-Tyne E)
Godman, Dr Norman


Brown, R. (N'c'tle-u-Tyne N)
Golding, John


Brown, Ron (E'burgh, Leith)
Gould, Bryan


Buchan, Norman
Hamilton, W. W. (Central Fife)


Callaghan, Jim (Heyw'd &amp; M)
Harman, Ms Harriet


Campbell-Savours, Dale
Harrison, Rt Hon Walter


Canavan, Dennis
Hart, Rt Hon Dame Judith


Carter-Jones, Lewis
Heffer, Eric S.


Clark, Dr David (S Shields)
Hogg, N. (C'nauld &amp; Kilsyth)


Clarke, Thomas
Holland, Stuart (Vauxhall)


Clay, Robert
Howell, Rt Hon D. (S'heath)


Cocks, Rt Hon M. (Bristol S.)
Hughes, Dr. Mark (Durham)


Cohen, Harry
Hughes, Robert (Aberdeen N)


Coleman, Donald
Hughes, Roy (Newport East)


Cook, Robin F. (Livingston)
Hughes, Sean (Knowsley S)


Corbett, Robin
John, Brynmor


Corbyn, Jeremy
Jones, Barry (Alyn &amp; Deeside)


Cowans, Harry
Kaufman, Rt Hon Gerald


Craigen, J. M.
Kilroy-Silk, Robert


Cunliffe, Lawrence
Kinnock, Rt Hon Neil


Cunningham, Dr John
Leadbitter, Ted


Davies, Rt Hon Denzil (L'lli)
Leighton, Ronald


Davies, Ronald (Caerphilly)
Lewis, Ron (Carlisle)


Davis, Terry (B'ham, H'ge H'l)
Lewis, Terence (Worsley)


Deakins, Eric
Litherland, Robert


Dewar, Donald
Lloyd, Tony (Stretford)


Dixon, Donald
Lofthouse, Geoffrey


Dobson, Frank
McCartney, Hugh


Dormand, Jack
McDonald, Dr Oonagh


Douglas, Dick
McKay, Allen (Penistone)


Dubs, Alfred
McKelvey, William


Duffy, A. E. P.
Mackenzie, Rt Hon Gregor


Dunwoody, Hon Mrs G.
McNamara, Kevin






McTaggart, Robert
Rowlands, Ted


Marek, Dr John
Ryman, John


Marshall, David (Shettleston)
Sedgemore, Brian


Martin, Michael
Sheerman, Barry


Maxton, John
Sheldon, Rt Hon R.


Maynard, Miss Joan
Shore, Rt Hon Peter


Meacher, Michael
Short, Ms Clare (Ladywood)


Michie, William
Short, Mrs R.(W'hampt'n NE)


Mikardo, Ian
Skinner, Dennis


Miller, Dr M. S. (E Kilbride)
Smith, C.(Isl'ton S &amp; F'bury)


Mitchell, Austin (G't Grimsby)
Smith, Rt Hon J. (M'kl'ds E)


Morris, Rt Hon A. (W'shawe)
Snape, Peter


Morris, Rt Hon J. (Aberavon)
Soley, Clive


Nellist, David
Spearing, Nigel


Oakes, Rt Hon Gordon
Strang, Gavin


O'Brien, William
Straw, Jack


O'Neill, Martin
Thomas, Dafydd (Merioneth)


Orme, Rt Hon Stanley
Thomas, Dr R. (Carmarthen)


Parry, Robert
Thompson, J. (Wansbeck)


Patchett, Terry
Thorne, Stan (Preston)


Pavitt, Laurie
Tinn, James


Pike, Peter
Warden, Gareth (Gower)


Powell, Raymond (Ogmore)
Wareing, Robert


Prescott, John
Welsh, Michael


Randall, Stuart
Wigley, Dafydd


Redmond, M.
Williams, Rt Hon A.


Rees, Rt Hon M. (Leeds S)
Winnick, David


Richardson, Ms Jo
Woodall, Alec


Roberts, Allan (Bootle)



Robertson, George
Tellers for the Ayes:


Rooker, J. W.
Mr. James Hamilton and Mr. Frank Haynes.


Ross, Ernest (Dundee W)





NOES


Adley, Robert
Budgen, Nick


Aitken, Jonathan
Bulmer, Esmond


Alexander, Richard
Burt, Alistair


Alison, Rt Hon Michael
Carlile, Alexander (Montg'y)


Alton, David
Carlisle, John (N Luton)


Amess, David
Carlisle, Kenneth (Lincoln)


Ancram, Michael
Carlisle, Rt Hon M. (W'ton S)


Arnold, Tom
Carttiss, Michael


Ashby, David
Cartwright, John


Aspinwall, Jack
Chalker, Mrs Lynda


Atkins, Rt Hon Sir H.
Channon, Rt Hon Paul


Atkins, Robert (South Ribble)
Chapman, Sydney


Atkinson, David (B'm'th E)
Chope, Christopher


Baker, Rt Hon K. (Mole Vall'y)
Churchill, W. S.


Baker, Nicholas (N Dorset)
Clark, Hon A. (Plym'th S'n)


Baldry, Anthony
Clark, Dr Michael (Rochford)


Banks, Robert (Harrogate)
Clark, Sir W. (Croydon S)


Batiste, Spencer
Clarke, Rt Hon K. (Rushcliffe)


Beggs, Roy
Cockeram, Eric


Beith, A. J.
Colvin, Michael


Bellingham, Henry
Conway, Derek


Bendall, Vivian
Coombs, Simon


Bennett, Sir Frederic (T'bay)
Cope, John


Benyon, William
Cormack, Patrick


Berry, Sir Anthony
Couchman, James


Best, Keith
Crouch, David


Bevan, David Gilroy
Currie, Mrs Edwina


Biffen, Rt Hon John
Dickens, Geoffrey


Biggs-Davison, Sir John
Dicks, Terry


Blaker, Rt Hon Sir Peter
Dorrell, Stephen


Body, Richard
Douglas-Hamilton, Lord J.


Bonsor, Sir Nicholas
Dover, Den


Boscawen, Hon Robert
Dunn, Robert


Bowden, A. (Brighton K'to'n)
Durant, Tony


Bowden, Gerald (Dulwich)
Dykes, Hugh


Boyson, Dr Rhodes
Edwards, Rt Hon N. (P'broke)


Brandon-Bravo, Martin
Emery, Sir Peter


Bright, Graham
Evennett, David


Brinton, Tim
Eyre, Sir Reginald


Brittan, Rt Hon Leon
Fairbairn, Nicholas


Brooke, Hon Peter
Fallon, Michael


Brown, M. (Brigg &amp; Cl'thpes)
Farr, John


Browne, John
Favell, Anthony


Bruce, Malcolm
Fookes, Miss Janet


Bruinvels, Peter
Forman, Nigel


Buck, Sir Antony
Forsyth, Michael (Stirling)





Forsythe, Clifford (S Antrim)
Leigh, Edward (Gainsbor'gh)


Fox, Marcus
Lester, Jim


Franks, Cecil
Lewis, Sir Kenneth (Stamf'd)


Fraser, Peter (Angus East)
Lilley, Peter


Freeman, Roger
Lloyd, Ian (Havant)


Fry, Peter
Lloyd, Peter, (Fareham)


Gale, Roger
Lord, Michael


Galley, Roy
Lyell, Nicholas


Gardiner, George (Reigate)
McCrindle, Robert


Gardner, Sir Edward (Fylde)
McCurley, Mrs Anna


Gilmour, Rt Hon Sir Ian
Macfarlane, Neil


Goodhart, Sir Philip
MacGregor, John


Goodlad, Alastair
MacKay, John (Argyll &amp; Bute)


Gorst, John
Maclean, David John


Gow, Ian
Maclennan, Robert


Greenway, Harry
McQuarrie, Albert


Gregory, Conal
Major, John


Griffiths, E. (B'y St Edm'ds)
Maples, John


Griffiths, Peter (Portsm'th N)
Marlow, Antony


Grist, Ian
Mates, Michael


Ground, Patrick
Mather, Carol


Grylls, Michael
Mawhinney, Dr Brian


Gummer, John Selwyn
Maxwell-Hyslop, Robin


Hamilton, Hon A. (Epsom)
Mayhew, Sir Patrick


Hamilton, Neil (Tatton)
Mellor, David


Hampson, Dr Keith
Meyer, Sir Anthony


Hanley, Jeremy
Miller, Hal (B'grove)


Hannam, John
Molyneaux, Rt Hon James


Harvey, Robert
Monro, Sir Hector


Haselhurst, Alan
Montgomery, Fergus


Havers, Rt Hon Sir Michael
Moore, John


Hawkins, C. (High Peak)
Morris, M. (N'hampton, S)


Hawkins, Sir Paul (SW N'folk)
Morrison, Hon C. (Devizes)


Hawksley, Warren
Morrison, Hon P. (Chester)


Hayes, J.
Neubert, Michael


Hayhoe, Barney
Nicholls, Patrick


Hayward, Robert
Nicholson, J.


Heath, Rt Hon Edward
Norris, Steven


Heathcoat-Amory, David
Onslow, Cranley


Henderson, Barry
Ottaway, Richard


Hickmet, Richard
Owen, Rt Hon Dr David


Hicks, Robert
Page, John (Harrow W)


Higgins, Rt Hon Terence L.
Page, Richard (Herts SW)


Hill, James
Parkinson, Rt Hon Cecil


Hind, Kenneth
Parris, Matthew


Hirst, Michael
Pattie, Geoffrey


Holland, Sir Philip (Gedling)
Pawsey, James


Holt, Richard
Peacock, Mrs Elizabeth


Hooson, Tom
Penhaligon, David


Hordern, Peter
Pollock, Alexander


Howard, Michael
Powell, Rt Hon J. E. (S Down)


Howarth, Alan (Stratf'd-on-A)
Powell, William (Corby)


Howell, Rt Hon D. (G'ldford)
Powley, John


Howell, Ralph (N Norfolk)
Prentice, Rt Hon Reg


Howells, Geraint
Price, Sir David


Hubbard-Miles, Peter
Proctor, K. Harvey


Hunt, David (Wirral)
Pym, Rt Hon Francis


Hunt, John (Ravensbourne)
Raffan, Keith


Hunter, Andrew
Raison, Rt Hon Timothy


Hurd, Rt Hon Douglas
Rathbone, Tim


Jenkin, Rt Hon Patrick
Rees, Rt Hon Peter (Dover)


Jenkins, Rt Hon Roy (Hillh'd)
Rhodes James, Robert


Johnson-Smith, Sir Geoffrey
Rifkind, Malcolm


Jones, Robert (W Herts)
Rippon, Rt Hon Geoffrey


Jopling, Rt Hon Michael
Roberts, Wyn (Conwy)


Joseph, Rt Hon Sir Keith
Robinson, Mark (N'port W)


Kennedy, Charles
Roe, Mrs Marion


Key, Robert
Ross, Stephen (Isle of Wight)


King, Roger (B'ham N'field)
Ross, Wm. (Londonderry)


King, Rt Hon Tom
Rossi, Sir Hugh


Knight, Gregory (Derby N)
Rost, Peter


Knight, Mrs Jill (Edgbaston)
Rowe, Andrew


Knowles, Michael
Rumbold, Mrs Angela


Knox, David
Ryder, Richard


Lamont, Norman
Sainsbury, Hon Timothy


Lang, Ian
St. John-Stevas, Rt Hon N.


Latham, Michael
Sayeed, Jonathan


Lawler, Geoffrey
Scott, Nicholas


Lawson, Rt Hon Nigel
Shaw, Sir Michael (Scarb')


Lee, John (Pendle)
Shelton, William (Streatham)






Shepherd, Colin (Hereford)
Thurnham, Peter


Shepherd, Richard (Aldridge)
Townend, John (Bridlington)


Shersby, Michael
Townsend, Cyril D. (B'heath)


Silvester, Fred
Tracey, Richard


Sims, Roger
Trotter, Neville


Skeet, T. H. H.
Twinn, Dr Ian


Smith, Tim (Beaconsfield)
van Straubenzee, Sir W.


Smyth, Rev W. M. (Belfast S)
Vaughan, Sir Gerard


Soames, Hon Nicholas
Viggers, Peter


Speed, Keith
Waddington, David


Speller, Tony
Wainwright, R.


Spencer, Derek
Wakeham, Rt Hon John


Spicer, Michael (S Worcs)
Waldegrave, Hon William


Squire, Robin
Walden, George


Stanbrook, Ivor
Walker, Rt Hon P. (W'cester)


Stanley, John
Waller, Gary


Steel, Rt Hon David
Walters, Dennis


Steen, Anthony
Ward, John


Stern, Michael
Wardle, C. (Bexhill)


Stevens, Lewis (Nuneaton)
Watson, John


Stevens, Martin (Fulham)
Watts, John


Stewart, Allan (Eastwood)
Wells, Bowen (Hertford)


Stewart, Andrew (Sherwood)
Wells, John (Maidstone)


Stewart, Rt Hon D. (W Isles)
Wheeler, John


Stewart, Ian (N Hertf'dshire)
Whitney, Raymond


Stokes, John
Wiggin, Jerry


Stradling Thomas, J.
Winterton, Mrs Ann


Sumberg, David
Winterton, Nicholas


Tapsell, Peter
Wolfson, Mark


Temple-Morris, Peter
Wood, Timothy


Terlezki, Stefan
Wrigglesworth, Ian


Thatcher, Rt Hon Mrs M.
Yeo, Tim


Thomas, Rt Hon Peter



Thompson, Donald (Calder V)
Tellers for the Noes:


Thompson, Patrick (N'ich N)
Mr. Tristan Garel-Jones and Mr. Douglas Hogg.


Thorne, Neil (llford S)



Thornton, Malcolm

Question accordingly negatived.

Finance (No. 2) Bill

Order for Second Reading read.

The Chief Secretary to the Treasury (Mr. Peter Rees): I beg to move, That the Bill be now read a Second time.
A month ago, when my right hon. Friend the Chancellor of the Exchequer presented his Budget to the House, he set it in the framework of a financial strategy for this Parliament and beyond. I think it is fair to say that the Budget caught the imagination of the House—or at least of a majority of the House—and the country, not because it was a give-away Budget—it was nor—but because it showed a firmness of purpose on financial strategy and a determination to initiate radical and imaginative reform of our tax structure.
The debate that followed the Budget rightly concentrated on the broad strategy. Tonight we start on the more technical and prosaic process of examining the Finance Bill. It runs to 123 clauses and 23 schedules. The House will be relieved to hear that I do not intend to take it through them one by one but rather to attempt to show how they reflect the main themes of the Budget.
However, I should point out at the outset that this year's Finance Bill contains rather more than the Budget proposals. Because of the general election last year it includes a number of the provisions introduced originally in the 1983 Bill. As a result, 44 clauses and 10 schedules —nearly half the Bill—have already been the subject of public exposure and public consultation. I am sure that our debates in the coming week will be better informed as a result.
We are also fortunate today to have available the Treasury and Civil Service Select Committee's report on the Budget. I am sure the House will wish to join me in congratulating my right hon. Friend the Member for Worthing (Mr. Higgins) and the other members of the Committee on producing a report so speedily. We shall all wish to study it carefully and at leisure. For the moment, while I may not be able to agree with all the Committee's conclusions, I was encouraged that it found a number of measures in my right hon. Friend's Budget both imaginative and welcome. I shall refer to some of its other conclusions later.
We understand and respect the reasons that make it impossible for the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) to be here tonight, particularly as we understand that he is giving a memorial lecture for a well-liked and respected former Member of the House whose absence we all deplore. I am sorry that we shall not hear his contribution to this debate but I am sure that there will be other opportunities to hear him.
The Budget was indeed imaginative and radical, but the reforms were set within the financial framework which we have pursued over the past five years and are determined to continue. We shall continue to reduce the rate of monetary growth and the level of public borrowing as a proportion of national output. This will maintain the pressure to reduce inflation and interest rates and so provide the financial stability which is crucial for our private enterprise economy.
At the same time, we intend—let there be no doubt about this — to maintain firm control of public expenditure. We realise, of course, the difficulties to


which the Select Committee has drawn attention, but we are determined not to relax our grip and thus to keep open the probability of a sustained policy of tax cuts which would improve incentives and assist the continuing improvement in the supply side performance of our economy.
In those ways the Budget provides the continuing basis for the sustained non-inflationary growth that has been the aim of all Governments since the war, although it has eluded many.
I hope that the House will allow me to remind it of what has been achieved so far. It is three years now since the trough of the recession. By the end of 1983 output was 7·5 per cent. above its low point, fixed investment was up by about 13 per cent. and manufacturing productivity up by 11·5 per cent. At the same time, inflation and interest rates have continued to fall.
In the month since the Budget further evidence has accumulated of the strength of the recovery. We have seen a cut in United Kingdom short-term rates—now 1·5 per cent. below United States short-term rates—a cut in the mortgage interest rate, continuing good news about inflation, record figures for exports in February, with encouraging figures for manufacturing exports, and further evidence of a healthy and necessary rise in company profits.
Outside forecasters who claimed six months ago that Treasury forecasts were over-optimistic are now bringing their forecasts closer into line with ours.
On the jobs front, while there has been an encouraging increase in the employed labour force over the past year, the recent figures on unemployment have undeniably been disappointing. But this Bill contains measures—notably the abolition of the national insurance surcharge and the corporation tax package—which will directly encourage job creation. More important, however, it reflects a strategy which tackles the problem at its roots.
Sustained improvement on the jobs front depends above all on our success in fostering a vigorous, confident and enterprising private sector able to compete successfully at home and abroad and eager to exploit opportunities. That is the objective of my right hon. Friend's Budget. That is why this is a Budget which improves the prospects for jobs.
However, it is the implementation of the Budget strategy in tax matters which is the heart of the Bill. There are two main themes that I commend to the House: first, a modest shift from taxing people's income to taxing their spending through an extension of the VAT base, on the one hand, and an impressive real increase in basic income tax allowances, on the other; and, secondly, a simplification of the tax system and the removal of undesirable distortions, particularly in corporate taxation, but not restricted to that area.
I hope that it will help the House if I follow the general ordering of the Bill in exemplifying those themes and bringing out the major points of interest. In chapter 1, we propose to raise most excise duties in line with inflation, with the exception of tobacco and the balance between wine and beer duties. I hope that the House will accept our proposals as fair.
Within our general approach, I draw attention to clause 5, which proposes exemption from vehicle excise duty for

recipients of war pensioners' mobility supplement, and clause 8, which provides for the freeports foreshadowed in the Budget speech last year and announced in February.
The next chapter deals with VAT, in particular the extension of the tax to building alterations and hot takeaway food and drink. It would be naive to imagine that such an imposition or extension of a tax will be universally welcomed, but I hope that the House and the country will look at the matter in the round.
First, I should emphasise that the total yield from the extensions will be £650 million in a full year, making, in other words, a major contribution to the cost of increasing the income tax thresholds. I also emphasise, returning to a point that was much debated in the summer of 1979, that VAT is not a tax on the poor or a tax on necessities. It remains, to quote one of my more distinguished predecessors, Lord Barnett, "mildly progressive".

Mr. Robert Sheldon: Whether VAT is mildly progressive or mildly regressive depends both on its rate and its incidence. The rate has increased to 15 per cent. and the tax is now being levied on foods that quite poor people buy in their working day. If the trend continues, VAT could become an extremely regressive tax.

Mr. Rees: The right hon. Gentleman has a long familiarity with VAT and, dare I say it, with manipulations of the rate. He should not anticipate anything that might happen in this or any subsequent Parliament. We are considering two relatively modest extensions.

Dr. Keith Hampson: Will my right hon. and learned Friend confirm that builders acting for the public sector will still be exempt, but that private builders who buy from the public sector to do up properties will be caught under his proposals? Has he looked at that again?

Mr. Rees: We shall take on board all the points made by hon. Members. It is not strictly accurate to say that the public sector is exempt. Government Departments pay VAT, though it is a circular payment. Local authorities are effectively relieved of the tax.
I remind the House that even after the proposed changes, only half of consumers' spending will be subject to VAT in the United Kingdom—the lowest proportion in the European Community.
Both the extensions that we have announced will remove difficult border lines that have been a source of confusion and anomaly. There is no sensible reason for taxing a hamburger consumed inside McDonalds or Wimpy bars at 15 per cent., but zero-rating those eaten outside.
Of course, every borderline has its difficulties and the press has had a field day in conjuring up images of cold chips and warm bread. Would that we had the wit and perspicacity of Sir Gerald Nabarro in our debate. However, I believe that the public can readily understand the distinction between cooked food eaten in a cafe or taken away and raw materials bought at a shop.
The extension of VAT to building alterations will also remove a major source of confusion, by eliminating the borderline between repairs and alterations, which has been the source of much unproductive litigation. We have been told that every increase in, or extension of, VAT will boost


the black economy, but I believe that removing these difficult border lines should make it easier to tackle evasion in the construction industry.
I do not expect the building industry to applaud the extension, but I ask it to see the change alongside other elements of the Budget that will be of benefit to the industry, in particular the abolition of NIS, the reform of corporation tax, the cut in stamp duty and the raising of the threshold for development land tax. I ask the House to recognise that three quarters of all building operations will still be zero-rated or tax deductible by the purchaser.
I have no doubt that the House will wish to consider the details of these measures in Committee, but I should like to take the opportunity to mention two small extensions of existing reliefs. First, the relief for lifeboats is being extended to lifeboat carriage and launching equipment supplied to the Royal National Lifeboat Institution. Many hon. Members, not excluding myself as the Member for Dover, are seized of the importance of that apparently modest extension. Secondly, the existing VAT relief for motor vehicles designed or adapted for use by the handicapped will be extended and matched by a new car tax relief. The effect will be that neither VAT nor car tax will apply to family cars designed for disabled people or substantially adapted for their use.
There was some confusion about the precise words used by my right hon. Friend the Chancellor of the Exchequer in his Budget speech. I hope that the matter has been cleared up and that the House and the country will appreciate that the press release put out by the Customs and Excise on Budget day, with the full authority and knowledge of my right hon. Friend, merely clarified and amplified his intentions on that relief.
I know that my hon. Friend the Member for High Peak (Mr. Hawkins) will wish to mention the scope of that relief, particularly in relation to an early-day motion that stood on the Order Paper at one stage.
On the income tax and corporation tax provisions, I hope that I can say without exaggeration that clauses 17 to 21 are some of the brighter jewels in the budgetary crown.
The revenue obtained from broadening the VAT base has been used to help raise the basic income tax allowances. The details are set out in clause 21. The increase of about 12·5 per cent. in the basic allowances is some seven percentage points more than required for indexation. It is one more step on a path that we have pursued since 1979, as resources have permitted, and that we intend to continue to pursue in future years. Basic income tax thresholds are 16 per cent. higher in real terms than they were in 1978–79.
Some hon. Members will recall that it was Conservative votes that put the indexation provisions on the statute book. That was done against the opposition of the then Labour Government, although we were joined on that occasion by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), to whom I am happy to pay tribute.

Mr. John Maxton: Joined? My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) moved the amendment.

Mr. Rees: I am sure that the House will recall the notable part played by my right hon. Friend the Chancellor of the Exchequer on that occasion. Since bouquets are in order, I present one to Mrs. Audrey Wise, whose absence

from the Opposition Benches is no doubt regretted by Labour Members. We have made some progress in taking the low-paid out of tax, but we need and intend to go further. I am sure that the hon. Gentleman will support us in what we are doing now.
There has been some criticism that we should have used the funds available to increase child benefit to make a bigger impact on the poverty trap. As I stressed in the Budget debate, the decision about child benefits will be taken and announced at the proper time—after the May RPI figures become available in June. There is some misunderstanding about the interaction of child benefit and tax and I hope that the House will allow me to examine the facts briefly.
Let me start with the poverty trap — that is, the position facing some people in employment who pay income tax and receive means-tested benefits at the same time. If they earn more—up to a certain point—the loss of benefit coupled with increased tax may mean that their net income hardly rises and in extreme cases may even fall. The marginal rates are highest for families receiving family income supplement. An increase in child benefit by itself will not touch that problem. It does not affect the rate at which tax is charged or means-tested benefits withdrawn, nor will it reduce the number of people in the Tax-FIS trap. Only if an increase in child benefit is accompanied by a reduction in means-tested benefits will the number of families in the trap be reduced. In practice, that would mean reducing the amount of FIS. If that were done, the incomes of the families involved would not rise to reflect the increase in child benefit and that approach would not improve the unemployment trap. I doubt whether that is what enthusiasts for child benefit in or out of the House intend.

Mr. Brynmor John: The Chief Secretary is advancing a most interesting argument, but why have the Government decided to study child benefit in isolation from the tax system if the interaction between the two is as closely allied as he argues?

Mr. Rees: I did not say that we had decided to study child benefit in isolation from the tax system; merely that the decision would be considered. I have much ground to cover——

Mr. Laurie Pavitt: Answer.

Mr. Rees: As I am only halfway through my answer, perhaps the hon. Member will do me the courtesy of allowing me to complete it. I said that the problem must be considered in relation to the May to May figures and announced at that time. The House will recall—I do not remember hearing any protests from the Opposition at the time—that in 1981 it was not possible to index the tax thresholds, yet child benefit was increased.
By contrast, raising tax allowances has a number of advantages. First, it relieves some families from the poverty trap by taking them out of tax altogether. Secondly, it benefits all taxpayers whether or not they are in the poverty trap or have children. Six million families receive child benefits. Twenty million families and single people benefit from an increase in tax thresholds. Thirdly, it improves the unemployment trap by raising net income from work across the board.
I do not pretend that what we have done solves the problem, but it makes a real step forward — a more


effective step than an exclusive concentration on child benefits. I notice that the Select Committee did not recommend how to tackle the problem of the poverty trap.

Mr. Ralph Howell: Can my right hon. and learned Friend explain how, despite raising the tax threshold by 12·5 per cent., we have released only 850,000 people from taxation whereas last year and the year before we released 1·2 million?

Mr. Rees: That is because the rate of increase in incomes was not of the same order.
I shall deal now with the measures designed to remove distortions and simplify the structure of company taxation. Clause 18 provides for the progressive reduction in the main rate of corporation tax to 35 per cent. by 1986–87. Clause 20 provides for the immediate reduction of the small company rate to 30 per cent. Clause 47 abolishes stock relief. Clause 57 and schedule 12 provide for the progressive removal of first year and initial capital allowances and their replacement by a system of writing down allowances.
A system of corporation tax with low rates and few and simple reliefs must be preferable—I hope that that is common ground in the House—to one with high rates offset by complex and indiscriminate reliefs. It is in no one's interest that decisions on investment projects should depend so much on the details of tax legislation and the advice of lawyers and accountants rather than the commercial appraisal and business acumen of those engaged in manufacture and trade.
The House will have noticed that the general secretary of the TUC said in evidence to the Select Committee that
there are a lot of nonsenses in the way corporation tax is operated",
and that the TUC
would not argue with the need to reform the structure of corporation tax".
Sir James Cleminson, on behalf of the CBI, said that
the new tax system will be more favourable than the old
and that the Budget
has made it more possible for business to achieve the growth that we need".
The reduction in United Kingdom corporation tax rates leaves the levels below those of most of our competitors both in Europe and in America. It is worth reflecting that these measures, coupled with those in chapter VI on controlled foreign companies, will make it more attractive to take a profit here than overseas. These measures will be good for business, good for enterprise and good for jobs.
Part II contains much else which should have lasting benefits for companies.
The share option schemes are improved in clauses 38 and 39. The new relief proposed for approved share options will replace the income tax charge with a capital gains tax on disposal of shares and should help companies to attract and motivate key managers on whom so much depends. The corporate finance package contained in clauses 35, 36, 41 and 62 includes a number of measures which should give companies greater flexibility in raising finance and so give a modest stimulus to a revival in the corporate bond market. We shall be able to scrutinise the details of the Bill in Committee.
On capital gains tax, I should, however, like to draw the House's attention to the provision that will allow gifts to heritage maintenance funds to be treated as other gifts

as has long been urged by the Historic Houses Association. That is followed by other provisions designed to remove distortions in savings and investment. The provisions relating to life assurance premium relief are contained in clause 70.
I should mention a further relief that we propose to introduce in Committee as an amendment to the Bill in relation to industrial life assurance business only. It will enable an industrial assurance policy to continue to be eligible for relief if it was prepared for issue before 14 March 1984 and the fact of that preparation was recorded in the books of the company or society before that date. That will provide much assistance for such companies and societies, because their position is slightly different from that of the straightforward life assurance policy.

Mr. Ian Wrigglesworth: Will the Chief Secretary confirm that the Government's policy is to treat all savings equally in tax terms? Is he aware that that decision has given rise to great concern in many sectors of the savings industry? It would be helpful if the Government had discussions with those in the industry to ensure that equality of treatment was given.

Mr. Rees: We are open-minded on that matter and we shall listen to any representation that may be made to us. I fully appreciate the hon. Gentleman's point.
There are adjustments in the corporation tax regime for the oil and gas industry in clauses 75 to 79 and minor changes in petroleum revenue tax.
The next two lengthy sections of the Bill contain measures to counter tax avoidance. Clauses 80 to 89, together with schedules 16 to 18, deal with controlled foreign companies. Clauses 90 to 97 and schedules 19 and 20 are concerned with offshore funds. Both of those major pieces of legislation have been the subject of full consultation in advance, and in the light of some late representations we shall be bringing forward further amendments to offshore funds legislation in Committee.
On this subject, I should also touch on the implications of the recent decision of the House of Lords in Furniss v. Dawson. I am aware of the acute interest in that case. Taken with the decision in Ramsay's case, it is now clear that the widespread assumption based on the Duke of Westminster's case in the 1930s—that the courts will always look at the form rather than the substance of a transaction or various transactions—is no longer valid.
The House of Lords made it clear that this is an evolving area of law, but the emerging principles do not in any way call in question the tax treatment of covenants, leasing transactions and other straightforward commercial transactions. Nor is there any question of the Inland Revenue challenging, for example, the tax treatment of straightforward transfers of assets between members of the same group of companies. I also assure the House that, in accordance with normal practice, the Inland Revenue will not seek to reopen cases when assessments were properly settled in accordance with prevailing practice and became final before that decision.
The Board of Inland Revenue will also see whether clearance for types of case of special importance or general guidance for the benefit of taxpayers and their advisers can be given. The principle in Furniss v. Dawson should lead in future to greater simplicity in our tax system and will, I hope, enable us in time to prune out provisions which owe their existence to the complexities of a high rate—


some might say a confiscatory rate—tax system with a multiplicity of special reliefs. I am sure that the whole House will welcome that.
The changes that we propose in capital transfer tax and stamp duty reflect our determination to simplify the system and lighten the burden of tax. The changes in development land tax similarly reduce the incidence of taxation and should assist industrial and commercial development.
This Bill has not just changed and simplified the structure—it has abolished taxes too. Excise duties on kerosene and the investment income surcharge have gone and the abolition of investment income surcharge will, I hope, be received with enthusiasm and certainly without regret. It discriminated against investment, was unfair to many retired people who could not by any stretch of the imagination be called rich and was particularly discriminatory against those who retired from self-employment with no prospect of a company pension and had to rely on income from the proceeds, sometimes in the form of annuities, of selling their businesses or professional practices. Opposition Members who referred to people with capital of £70,000 must have overlooked the fact that there are many people who fell within the investment income surcharge who do not have disposable sums of capital. I believe that what I have described will be widely welcomed by such people.
Finally, this Bill sees the end of the national insurance surcharge. I will not labour the case for abolition. I doubt whether the tax ever had many enthusiastic supporters even during the darkest hours of the last Labour Government. However, I repeat that the reduction of this tax on jobs since 1979 from 3·5 per cent. to zero is worth some £3 billion a year to employers and has removed a substantial inducement to employers to keep down employment. I hope that it will be common ground between us that this is a tax that we should be without.
I have been privileged to take part in debates on many Finance Bills, but I have to admit that some have been of limited general interest and high technicality. I would, however, claim that this Bill is of a different order. Basing ourselves on the solid economic achievements of the past five years, and without compromising those achievements, we have designed this Bill as a further important step to a fairer, simpler, less distortionary tax system. Of course there will be individual points on which some hon. Members will have reservations. We shall have to consider some of them further in Committee, but, viewed as a whole — and I ask the House to view this Bill as a whole—I claim, without I hope naive enthusiasm, that this is an important Finance Bill, a reforming Finance Bill and a Finance Bill which will take us a long step further towards creating a healthy fiscal climate in which individuals and businesses can flourish. On that basis, I ask my hon. Friends to give it a Second Reading tonight.

Mr. Jeff Rooker: The Chief Secretary's final words are important, because he said that this is a different Finance Bill. It is weighty, and I accept his point about the number of clauses that have previously been published.
Bearing in mind the scale of the changes that the Bill makes in respect of people's incomes, company taxation and the scale of the increases in taxation that it will create, I should have thought that its 123 clauses would have caused the Chief Secretary to spend a little more time

giving us more details about what the Government have in mind. As far as I am aware, he has highlighted at least two cases of the Government bringing forward amendments. They are substantial, but I do not accord them any priority. He has outlined amendments that will be presented in Committee. The notes on clauses that were available when the Bill was published are littered with a sentence to the effect that the Government will bring forward amendments in Committee. Substantial changes have been made, although the Bill has been in gestation for a considerable time. The Chief Secretary therefore should not, and I believe will not, complain When the Committee examines the changes that the Government are making to their own Bill which they have spent the best part of 12 months creating.
This is the first real Finance Bill since the general election and the first real statement of financial policy in the Government's second term of office. I should have thought that they would have got many more details set and organised. I shall pick up the example of the Royal National Lifeboat Institution, which the Chief Secretary mentioned. Were the Government unaware of the problem before the Buget statement? Did they not realise what problems the imposition of a VAT bill of £45,000 on the RNLI would create? They have suddenly discovered. on Second Reading of the Finance Bill, that it is a good idea to table an amendment to cure the anomaly. With a little more consultation, that unfortunate problem, and others, could have been avoided.
The Bill is presented when the tax burden in Britain is at an all-time high. I do not believe that anyone will quarrel with that statement. The Chief Secretary, said as much at the Tory party conference last year when he said:
I must emphasise that the dilemma facing any Chancellor is that a high tax system is only supportable with a complex system of reliefs built in.
That was last year, not three or four years ago. To deploy part of the Opposition's case, I must spell out how the disposition of the tax burden arises, just in case people are under the impression that there have been massive tax reductions because of what the Chief Secretary has said about thresholds. The Bill makes the tax burden heavier.
The Government have told us that taxes in 1984–85 will yield £127·5 billion. That figure was given in a parliamentary answer on 20 March. The tax yield in 1978–79 at 1984–85 prices was £105 billion. Taxation this year is therefore £22·5 billion higher in real terms, after this Budget, than in the last year of the Labour Government. The Chief Secretary has highlighted the fact that abolition of the national insurance surcharge has saved £3 billion, but we must still deal with the rest of the tax burden. Corporation tax is up, as is North sea tax. Believe it or not, capital taxes and stamp duty are up in real terms even after the Bill. National insurance contributions from employees and employers are up, as are local authority rates and taxes on expenditure. Of all the items that the Government gave in a breakdown of the increased burden of taxation in a parliamentary answer on 28 March, only income tax — which is down £300 million — and the national insurance surcharge are reduced. Every other tax which makes up the tax burden is up in real terms after five years of Conservative Government.
Even so, it is worth pointing out that in the financial year 1983–84, the Government stated that the real tax burden, compared with 1978–79, was up £17 billion. That figure was given at Question Time on 22 December 1983.
It is up £22·5 billion in real terms, with one year's difference in prices and inflation at 5 per cent. We are talking about the difference between £17 billion in one year and £22·5 billion in another year—£5·5 billion extra one year with another in real terms. Knock off the inflation rate, and one is left with a substantial increase in the tax burden in the year that has just gone, which was election year, as against the year that has just started.

Mr. Chris Hawkins: Would the hon. Gentleman tell us how much higher the tax burden would have been if the Government had implemented the claims continually made by the Labour party that it would spend more on education, health, roads and so on?

Mr. Rooker: I look forward to the hon. Gentleman asking the Government why they are increasing the tax burden on the British people so severely in the year following the general election. It will be interesting to see what answers he will get from the Government Front Bench.—[Interruption.] Of course I am not answering the question. That is the job of the Government. The Government are imposing an extra burden of £5 billion on the British people this year compared with last year. I am not accountable to the House for that imposition. It takes a brass face, when there is an increase of approximately £5 billion, to say that the Budget is neutral, and that the Finance Bill gives tax cuts. Of course, there are tax cuts in the Finance Bill, and we shall come to some of the people who benefit from the tax cuts, because those tax cuts are paid for by other people, as they must be if the overall tax burden has increased so severely. That is why this substantial Finance Bill, as the Chief Secretary has said, is different from any other Finance Bill presented to the House, and it has to be debated fully.

Mr. Tim Smith: Has it not occurred to the hon. Gentleman that the simple explanation might be that real incomes have risen substantially over the last five years?

Mr. Rooker: The hon. Gentleman can look at the breakdown of the figures in Hansard of 28 March and see how the £22·5 billion is made up. Then he can read in Hansard of 16 January, at column 23, how the £17 billion is made up. He will see for himself that, while real incomes have gone up, and while real taxes on incomes have gone up, the tax burden has increased across the board, except on the two items that I mentioned—the national insurance surcharge and income tax in its narrower form. On all other counts, real taxes have gone up. That is not all attributable to the increase in real earnings. I look forward to the hon. Gentleman's speech, because he obviously has some questions for the Government Front Bench.
Let us look at how the massive increase has been shared. The increase is made worse as a result of the Finance Bill. We are, of course, grateful to Ministers for answering the detailed questions that they were prepared to answer after, but not before, the Budget.
The Chancellor constantly reminds the country that the Government have reduced the basic rate of tax from 33p to 30p, but forgets to say that the starting point of tax when the Government came to power in 1979 was only 25p in the pound for many people. It seems that this is a minor

matter for the Chancellor. It had a substantial effect on the very low paid and assisted in keeping down the tax burden of the average wage earner.
I have been selective in quoting from Hansard, because I wish to give good examples of the unfairness implicit in the Finance Bill. I suggest that we take the last year of the Labour Government and look at the proportion of income attributable to tax, national insurance and child benefit, where appropriate, of a person on two thirds average earnings—and that means the majority of people in the country. Sixty per cent. of workers earn less than the average earnings that are so often quoted. I therefore assume two thirds average earnings in my examples.
In the last year of the Labour Government, a single person on two thirds average earnings paid only 27·7 per cent. of his or her income in tax and national insurance. After the Budget and Finance Bill, it is not 27·7 per cent., but 29·5 per cent. In the last year of the Labour Government, a married couple were paying 22·2 per cent. of their income in the tax take, again assuming two thirds average earnings. After the Budget and Finance Bill, a married couple will pay 24 per cent.—an increase in the proportion of their income taken in tax. In the case of a married man with two children, the figure is 12 per cent. in the last year of the Labour Government, and 13·1 per cent. after the Budget and Finance Bill which allegedly cut taxes.
Let us compare that with a person on five times average earnings—the entrepreneur who will put factories in the green field sites. Such a person, under the Labour Government, paid 52·6 per cent. of his income in tax, national insurance and child benefit, where appropriate. After the Budget and Finance Bill, the figure is down to 45·1 per cent. A married couple on five times average earnings, under the Labour Government, were paying 50·9 per cent. of their income in the tax take. After the Budget and Finance Bill, the figure is 43·6 per cent. In the case of a married man with two children, the drop is from 49·2 per cent., under the Labour Government, to 42·2 per cent. under this Government. Those figures were given in answers on 23 November 1983 and on 5 April this year.
It is clear that the Tory party remains the party of higher taxation if one has not got very much. After the Budget and Finance Bill, the reality is a bigger tax take from the pay packet than under the Labour Government.
There is another way of looking at this, and Ministers will be looking for ways round the arguments. It can be looked at in terms of the effect of tax changes on real net earnings as a result of the Finance Bill. After the Budget and Finance Bill, a single person on two thirds average earnings will have an increase of 7·2 per cent. in his real take-home pay in 1984–85 compared with the position under the Labour Government. A single person on five times average earnings will have a real increase in his net take-home pay of 27·2 per cent. after the allegedly neutral Budget and Finance Bill. Similar figures apply along the scale to different family groups up to the married man with two children, on two-thirds average income, who has a real net increase of 8·4 per cent. compared with a 25 per cent. real net increase in take-home pay for a man in a similar situation on five times average earnings.
We have to look at this yet another way, because this is the way it will be looked at by millions of wage earners who believe some of the propaganda put out by the Government, and the largely popular Budget of the Chancellor, the reality of which is beginning to be


perceived throughout the country. This method is to see what the position would be if one attempted to change the tax liability of a person back to what it was under the Labour Government, and what would have to be done to achieve that. The House will remember that that was the "high-taxing" Labour Government who caused all the pop stars to go abroad, thus smashing up industry. The reality, which cannot be denied, is that, after the Budget and Finance Bill, a tax cut equivalent to 9p off the basic rate would be needed to restore the tax burden on a couple on average earnings to the 1978–79 level. I repeat, 9p off the basic rate to get the tax take back to what it was under a Labour Government. That takes account of the 12·5 per cent. increase in thresholds contained in the Bill.

Mr. Tim Smith: Those figures are completely meaningless. The hon. Gentleman has already told us that someone on two thirds averge earnings has enjoyed an increase of 7·2 per cent. in real take-home pay. If the hon. Gentleman is going to give us those figures for taxation, he should also tell us how much worse off people would be if we went back to the last year of the Labour Government, because the standard of living would have to be cut.

Mr. Rooker: Every figure that I have so far given has come from the Government. They do not claim that the figures are wrong. The fact is that to get the tax burden back——

The Chancellor of the Exchequer (Mr. Nigel Lawson): The tax burden as a proportion.

Mr. Rooker: I shall come to that point in a moment. But what would be needed to get the tax burden back, in real terms, to what it was under the Labour Government? The answer is the equivalent of 9p off the basic rate.

Mr. Christopher Hawkins: rose——

Mr. Rooker: I shall finish my point, because then the hon. Gentleman may not need to intervene.
I accept that the Chancellor of the Exchequer and his Ministers could have said, as has been implied already, that earnings are up ahead of prices. However, they did not say that. They did not say that if earnings stayed ahead of prices, they would belt us with tax. It so happens that the threshold system is tied to the retail price index, not to average earnings.
If, each year, the thresholds are indexed only to the retail price index and wages are ahead of prices, the Chancellor of the Exchequer is getting just as much of a hidden tax take as happened in the mid-1970s. He does not have to come to the House and say that he wants to raise income tax. He may say that he will raise thresholds in line with inflation, but he does not point out that the Treasury's coffers will gain billions of pounds because of the increase in the tax take due to the real increase in earnings. I fully accept that the figure of 9p could be reduced to 3·7p in the pound if one got it back to the average proportional take of income. I accept that, and the figure comes from the Chancellor of the Exchequer. However, we would still require a cut in the basic rate of income tax of 3·7p in the pound to get it back to what it was in the last year of the Labour Government, if income tax represents the same proportion of earnings. Whichever way one does the calculation, the tax burden in real terms and as a proportion is sky high compared with the position under the Labour Government. It does not matter which way one

does the sums. The Chancellor of the Exchequer and the Government know that, but clearly Conservative Back Benchers do not.

Mr. Andrew F. Bennett: Will my hon. Friend confirm that he is saying that the so-called Rooker-Wise-Lawson amendment should have been tied to wages as well as to the retail price index?

Mr. Rooker: No. To prevent someone from standing here to make the case that I have just made, the amendment should have been tied to wages or prices, whichever was the higher. I shall let hon. Members into a secret. When those amendments were being drafted by me and my former hon. Friend, Mrs. Wise — without any help from the present Chancellor of the Exchequer — we discussed whether to index tax thresholds to earnings or prices. We decided consciously on prices. We made that decision because we thought that it might assist our right hon. and hon. Friends who were then Ministers. It was a deliberate decision. There was an amendment which used earnings as well, but it was not, in the Chairman's wisdom, selected. However, I suspect that my hon. Friend the Member for Denton and Reddish (Mr. Bennett) has given Conservative Members some good ideas for the time when that clause is debated in Committee on the Floor of the House.

Mr. Christopher Hawkins: The burden of tax has increased in order to pay for increased Government expenditure in many areas and to reduce the public sector borrowing requirement so that we can keep down interest rates. However, the hon. Gentleman did a bit of sleight of hand when he said that tax rates on average would be lower if we went back to the total tax burden of 1978–79. Before that he spoke about pop stars going abroad because of high tax rates and industry being crippled. That happened because the top tax rates were extremely high—up to 98p in the pound on dividends. The big change has been to bring the top tax rate down in order to increase incentives and to develop industry. Surely the hon. Gentleman will not quarrel with the fact that there is a link between incentives and the top tax rate.

Mr. Rooker: The hon. Gentleman has answered his own question. I was paraphrasing the former Chancellor of the Exchequer who used to complain, when he was in opposition, about the pop stars and entrepeneurs who would flood back to Britain if the top tax rates were reduced. I suspect that the hon. Member for High Peak (Mr. Hawkins) has been a Member of Parliament only since the election and was not here in the summer of 1979. If he had been here since the summer of 1979 he would know that in the Government's first Budget there were big cuts in the top rates of tax. But where are all the entrepeneurs who are supposed to be building factories on green field sites and creating the new environment that was promised when the top tax rates came down? Those rates came down years ago.
Who gains from the Bill? What does someone have to earn to be better off as a result of the Bill? I must apologise to the House, because the answer came only last night and is not in today's edition of Hansard. It comes from the Financial Secretary to the Treasury and updates a question that I had asked earlier. I shall repeat the question, because I do not want to be accused of putting a false argument to the House. I asked the Treasury to update a table which


showed what multiples of average earnings someone would need to earn if he was to pay the same proportion in tax, national insurance and child benefit as under the Labour Government.
After this Budget, a single person needs to be on exactly twice average earnings if he is to pay the same proportion. For the purpose of the answer, average earnings were taken at £182 per week in 1984–85. Therefore, it can be said that the tax take is less as a proportion only if the person is single and earning more than £364 per week. That is twice average earnings. After five years, the only people to be better off proportionately—which is what the Chancellor of the Exchequer is concerned about— are single people earning more than £364 per week, married couples earning more than £345 per week, married couples, with two children, earning more than £309 per week and, for some quirky reason, married couples, with four children, who have got to be earning more than £327 per week. The multiples that I was given were 2, 1·9, 1·7 and 1·8. They take into account the child benefit increase in November, which is forecast — according to the Government's public expenditure White Paper—to be 5·5 per cent. The White Paper says that the increase will be announced in June, but I do not think that it will make much difference to the point that someone has to be earning a lot of money every week before he gains after five years of this tax-cutting Tory Government. That is the point.
I think that I have made the case that personal taxation on earnings has gone through the roof under this Government, whichever way one looks at the facts, compared with what happened under the Labour Government.
The Government decided to abolish investment income surcharge — the extra tax on what used to be called unearned income. Unfortunately, because of a quirk in our procedures, about which I make no complaint, the Bill does not contain a clause to abolish investment income surcharge. When abolishing a tax, the biggest ruse is to prevent the Opposition from voting against the move by not including a clause which abolishes that tax. Despite that, we shall oppose the proposal because it is unfair. The clerks and other officers have been very helpful about procedure.
I accept what the Chief Secretary said about annuities, but one must have capital of £80,000 before one pays investment income surcharge. Investment income per week has to be over £140—not an insignificant sum. I accept that the capital might have been earned, but the income is not earned. National insurance contributions are not paid on unearned income. In some cases the tax difference between unearned and earned income is distorted by the effect of national insurance contributions not applying to investment income. All of a sudden 15 per cent. in tax goes, whereas people on earned income are left with the penal 9 per cent. national insurance contribution.
The Government claim that 50 per cent. of the people relieved from investment income surcharge are over 65 years of age. I do not query that. "We must be kind to the pensioners," the Government say. So what? What if half of those involved are over 65? If the Government really had the interests of the over-65s at heart they would not restrict the age allowance increase to the over-65s to 5·3 per cent. compared with 12·5 per cent. for everyone sitting

in the Chamber, for example. That is a gross unfairness, and it shows which group of over-65s this Government are interested in. Are they interested in those with a small occupational pension of perhaps £10 or £25 a week, or are they interested in those with capital of £80,000 and an unearned income of over £140 a week? That is the priority for the Government in relation to the over-65s. They cannot argue against that. They have given the country light and sight of their priorities for the over-65s.
We shall debate the restriction of the age allowance on the Floor of the House. We shall be given the opportunity to amend the provision. The short changing in the age allowance will cost a couple £81 a year in net income. A single person will lose £51 a year. I refer to over-65s with small incomes, not the investment incomes to which the Budget is directed. The cost involved is small indeed— only £130 million — whereas the Government are deciding not to collect about £360 million in investment income surcharge — three times the amount that is required to keep the age allowance.
The Chief Secretary rightly said that we might have been unfair in some respects since capital may not be easy to get hold of. For some, the limit is only £80,000. That may be small fry to him, but it is not to the majority. Of the 270,000 people relieved from paying investment income surcharge—that rich group—150,000 are over 65. We learnt from the Treasury that 60,000 of the over-65s had average investment incomes of £15,400 in 1983–84. Their capital was not £80,000, but a minimum of £130,000. That means that half the pensioners that the Government are letting off have, according to a written reply on 9 February, up to £130,000 in capital. That is an example of the Government's priorities in changing taxation law. They are being grossly unfair and insulting 10 million pensioners.
Such decisions must be compared with the decision to abolish relief on life assurance. I do not argue that the two are intertwined, but I want to compare the people affected by the two changes. In general, since the Budget most insurance companies have taken a vow of silence. I accept that hon. Members probably have had occasional representations from insurance companies. I exempt from my criticism two of which I am aware — the Royal Insurance company and the Scottish Equitable Life Assurance society. In general, insurance companies do not seem to me to be too bothered about the change. They do not think that it is particularly unfair.
Life assurance relief has been given for well over 100 years. It was continued even after the Royal Commission on income tax early this century. The reason is as valid today as it was then— it encourages saving by small income earners on a regular basis. That is how the Pm grew to the size that it is today. Regular saving was thought to be prudent and became part of public policy. The Government apparently are no longer interested in that, because they are not interested in small income earners. They are interested only in people with high unearned incomes. That is the priority in the Finance Bill.

The Financial Secretary to the Treasury (Mr. John Moore): Nonsense.

Mr. Rooker: The evidence is there. The Government are abolishing relief for small income earners, but cutting 15p in the pound off tax for those with an unearned income of £140 a week. The figures speak for themselves.
The Chief Secretary referred to the poverty trap. No one will claim that the poverty trap has been abolished by the Budget, and I do not think that the Chief Secretary said that. However, he mentioned child benefit and its interaction with family income supplement. Another way of solving the problem, which the Chief Secretary highlighted, is to raise the child benefit by more than the other benefits. The Government do not have to cut the other benefits. They could raise child benefit more than family income supplement, scrap the child additions to national insurance and supplementary benefit and create a fair and equitable system. That is one way of solving the problem without cutting incomes.
The Chief Secretary gave us only one alternative. I shall re-read his speech. If I have misunderstood, I hope that he will table an amendment to which we can give our support.
When a Government decide to cut housing benefit to fund some of their fiscal changes, both aspects must be taken into account by the legislation. The Institute of Fiscal Studies claims that the proportion of families at 4·3 per cent. in the poverty trap, facing a marginal tax rate of more than 60 per cent.—the highest rate of income tax —remains exactly what it was before the Budget, taking into account the housing cuts introduced this month and due to come into force in November. Of the families in the poverty trap, 4·3 per cent. have a marginal tax rate of more than 60 per cent. and this will stay exactly the same after this Budget. Indeed, it is argued that the percentage of families in the poverty trap and with an effective marginal rate of tax of more than 60 per cent., because they are losing benefits as their income goes up, will go up to 5·6 per cent. before the end of this financial year.
I do not wish to be personal, but the Chancellor, on his salary of £813 a week, does not pay tax at more than 60p in the pound. Nor does any other hon. Member. I cite the Chancellor because it is his Bill and his Budget. I do not think he would deny he is not paying a marginal tax rate of more than 60p in the pound, whereas 4·3 per cent. of the families stuck in the poverty trap were before this Bill and will be after it. If the Treasury Front Bench can produce any evidence, now or in Committee, to refute the Institute of Fiscal Studies' figures, I have no doubt that the institute will be pleased to receive the information. I know that I and my hon. Friends would be.
The Chief Secretary also referred to taking people out of tax. When there was an intervention about the apparent discrepancy between tax this year and that in previous years, there was some laughter, but the Chief Secretary gave a true answer—that the threshold has risen a lot higher than earnings.
Taking people out of tax at Budget time is a myth, because the number of people whom the last Chancellor took out of tax in five Budgets was 5 million, but he put 3·3 million of them back into tax. So he took 1·7 million people out of tax, but we know where those 1·7 million people are—they are lining up outside the diminishing number of jobcentres, because they are on the dole queue. So it is nonsense to say, "I have taken all these people out of tax; what a good Chancellor I am". The vast majority of them will be back into paying tax before his next Budget. This ought to be exposed for the myth that it is.
The Chief Secretary replied to an intervention about the comparison between taxes in this country and those in other countries. I do not claim that we are a high-taxpaying country compared to other countries. I do not think that any of us would claim that. I am claiming that the tax

burden is unfairly distributed. That is the contention of my hon. Friends. Britain does not even appear in the top 10 countries with the highest top rates of income tax on earned income, but both Sweden and Japan do. They are just two of our economic competitors.
When it comes to tax on investment income, however, I have been surprised to find, trawling through Hansard, that Japan taxes investment income at 75 per cent., which is what we were doing before this Budget—the 60p plus the surcharge. It does not seem to be a disincentive in Japan. But what is the evidence we are getting in this country? There does not seem to be a shred of evidence that any of the money saved from investment income surcharge will be directed towards new investment in the manufacturing sector. I shall not go through all the statistics, but the same tale could be told about a whole range of OECD countries.
Indirect taxes are an important part of this Finance Bill and of the Budget. I mentioned earlier the two parliamentary answers I used to deploy the argument about the massive increase in tax burden in March and January of this year. In this year which has just started, taxes on expenditure are £9·2 billion higher than under the last Labour Government. Last year they were £6·9 billion higher in real terms than in 1978–79, and there has been only 5 per cent. inflation between last year and this year. So we have over £2 billion extra taxes on expenditure from the last financial year—election year—to this year, this Budget and this Finance Bill.
That cannot be claimed to be the result of increased real earnings. [AN HON. MEMBER: "It could be higher spending."] Well, it is a question of how one taxes higher spending, is it not? That is a point which I shall make and which I have no doubt that many of my hon. Friends will make. It is £2 billion extra after this neutral Budget. No one has said that it is a neutral Finance Bill, because clearly it is not.
I do not propose to go through all the clauses because I am detailing the case on various aspects of the Bill and have chosen to concentrate on these aspects. The Low Pay Unit has estimated that the effect of the indirect taxes increases in clauses 1 to 4 will be to add 90p a week to the tax bill of the low-paid, thereby reducing their so-called income tax cut of £1·27 to 36p. Taking into account clause 10 and schedule 6—the VAT extensions—that tax gain to the low-paid is absolutely wiped out.
I noticed the interesting exchange between the Chief Secretary and my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon). It cannot be disputed that expenditure taxes are a higher burden on the low-paid. It is no good quoting a Labour Chief Secretary of five, six or seven years ago. The Central Statistical Office in 1982 and "Economic Trends" in 1983 showed that the bottom tenth of the income group paid indirect taxes as a proportion of income—not in real terms—amounting to 26·3 per cent. of their income. The highest tenth of the income group—and they are very well paid people—paid only 16 per cent. of their income in indirect taxes. Indeed, if one takes the third lowest group, the 20 to 30 per cent. band, who are relatively low-paid people, they are paying 28·1 per cent. of their income in indirect taxes.
I cannot see how anyone can say, on those figures, that the indirect tax burden does not fall more heavily on the poor than on the rich. It is as simple as that, and it is as


black and white as that. No amount of juggling or sophisticated words from Conservative Members will change that one iota.
What does the Chancellor propose to do in this Bill? He is to increase indirect taxation in real terms, as is indicated by the widening of the VAT net. I do not intend to make the same points as I made in the Budget debate, but I certainly wish to ask the Chancellor of the Exchequer, since he is here, a couple of questions.

Mr. Lawson: The hon. Gentleman will not get any answers.

Mr. Rooker: The Chancellor says from a sedentary position that I shall not get any answers. That will not stop me putting the questions so that they are on the record, irrespective of whether there are answers, because we shall keep asking the questions until we do get the answers.
I must take the Chancellor up on the extension of VAT and his own words since the Budget. On page 14 the 1970 Tory manifesto made the clear commitment:
Value added tax does not apply and will not be extended to necessities like food, fuel, housing and transport.
The Chancellor is on record—and he has not written to me and corrected this, although I wrote to him about it. In the Financial Times of 21 March, after the Budget, there was a story headed "Manufacturers condemn suggestion of tax on food". I shall read only the relevant part:
The Food Manufacturers' Federation, the major trade body, said it was 'vigorously opposed' to the idea.
The rumour was 'floated' by Mr. Nigel Lawson, the Chancellor of the Exchequer, in a radio interview. He said that while the previous Conservative administration had pledged no tax on food the present Administration had given no such undertaking. 'We are free to do what we think is right but I have no plans to move in that direction.'
I have written to the Chancellor asking him whether he was incorrectly quoted. If he was, he should put that on record; if he was not, it is a novel interpretation of the mandate.
I ask any Minister, from the Prime Minister downwards, what is the validity of the 1979 manifesto commitment not to put VAT on food, fuel, housing and transport? That commitment was not repeated in the 1983 manifesto. Even though they did not repeat the commitment, they won the election. Are they not bound by that commitment any longer? That is a straightforward question that requires a straightforward answer. Are they saying that they did not need to repeat the commitment because everyone knew that they would not put VAT on those items? Are they saying that they did not need to waste pages in the manifesto repeating something that everyone knew was a commitment — or has the Chancellor been quoted correctly? We must have an answer before the Finance Bill reaches the statute book. Conservative Members should not vote for the Bill until that answer is given.
Following the Budget, the Chancellor gave two private briefings to journalists—one on Wednesday 14 March and another for the Sunday newspapers on Friday 16 March. An article about the latter occasion states—and I shall give the source later:
In his briefing for Sunday journalists, Lawson went further. He said that he would widen the VAT net by introducing a multi-tier system. He would start by introducing a second, lower VAT rate which he could use to bring into VAT such things as electricity, public transport and some food (although not fresh food).

The Government are not claiming that they intend to tax fresh food. Did the Chancellor say that at the private press briefing? Peter Kellner of the New Statesman said on 23 March:
I hope MPs will challenge Lawson to confirm my account of his two post-budget briefings. If he does, he will start to rehabilitate the good name of reform. And if he denies my account, he is lying.
Those are the words of Mr. Kellner; I am not accusing the Chancellor of lying. I have not seen any letter from the Chancellor published in the New Statesman denying that article. I have not heard of any writ being issued because of the article.
If anyone has any doubt about the Government's intention to use the thin edge of the wedge in the Finance Bill to tax food, they should read the exchanges during Question Time last Thursday between my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) and the Chancellor. My right hon. Friend said:
Can the right hon. Gentleman give a clear undertaking that he has no intention of imposing VAT on basic foods?
The Chancellor replied:
I have no present intention."—[Official Report, 5 April 1984; Vol. 57, c. 1096.]
It is clear that the Chancellor is leaving his options open. He is prepared to renege on the specific commitment in the 1979 manifesto on which the majority of Conservative Members were elected.
Even if anyone believed the Chancellor's argument that take-away food outlets compete with restaurants, there is still sufficient reason to vote against the widening of VAT —we must stop him next year saying, "Last year, the House assisted me to widen the VAT net, and I intend to do it again this year." VAT on take-away foods was debated in detail during the Budget. The Chancellor said that it provided competition for restaurants. The average spend in a take-away food shop is £1·50 per head—about the amount of a tip, or even half a tip, given by Ministers in some restaurants. In addition, 80 per cent. of take-away meals are eaten at home. That does not signify great competition for restaurants.
Many Tory Members today will have been lobbied by small business men, entrepreneurs and family groups— people standing on their own two feet under the Government's tax burdens. They are running small businesses either as owner-operators or franchisees. The Chief Secretary gave the game away when he mentioned hamburgers and the Wimpy and McDonald chains—yet 71 per cent. of all the outlets for take-away foods comprise fish and chip and Chinese shops. They are not the large multinational hamburger chains to which the Chief Secretary referred. Those chains account for only 5 per cent. of the take-away food business.
I have not had time to check all the points put to me and other hon. Members by those who lobbied us today and who feel threatened by the change in VAT. On 7 February, in a written answer, the Government compared VAT on take-away foods among European countries. Yet we are told by those in that business that half of the examples the Government gave were wrong. For example, the Government said that VAT on take-away food in West Germany was 14 per cent., when in reality it is 7 per cent.; that in France it was 18·6 per cent., when it is 5·5 per cent.; that in Italy it was 18 per cent., when it is 10 per cent.; that in Belgium it was 19 per cent., when it is only 6 per cent. Indeed, they said that in Ireland it was 23 per cent. when in reality take-away food is zero-rated. It is 23


per cent. only if the goods include chips or confectionery. In Ireland they serve chips and fish separately to avoid VAT. For the Government to tell the House that because VAT is 23 per cent. in Ireland 15 per cent. in Britain is moderate is misleading the House and the industry. The Government were right about only two countries —Denmark with a figure of 22 per cent., and Holland at 19 per cent.
The Chancellor has brought forward a piece of ill-thought-out legislation that will not stand up to scrutiny in Committee. For example, what about the definition of hot food? In a fish and chip shop in the summer, workers could be working in temperatures of 100 degrees, with the food in a cabinet at 70 degrees. When the food is taken out of the cabinet, the ambient temperature will be lower than the temperature in the shop. That difference between ambient temperature and room temperature shows that the Government have put themselves in a terrible mess in drafting the Bill. I invite hon. Members to study part I of schedule 6 and to consider what the Government meant when they produced the Bill, assuming that they knew.

Mr. Andrew F. Bennett: What will happen to items such as the chip buttie? Will VAT be charged on the chips but not on the barm cake into which the chips are put?

Mr. Rooker: I hope that the Financial Secretary will tell us what will happen to chip butties when he replies. The Chief Secretary talked about cold potatoes in hot bread and cold meat in hot bread. My hon. Friend has produced an example that operates in reverse. How will the chip buttie stand for VAT considerations? What will happen if someone sells frozen pre-cooked food in his shop and places by the doorway a microwave oven for the customer's use after he has bought his food so that he may heat it himself? I am not drawing the Chancellor's attention to anything that has not already been put to him. The provisions on take-away food are chockful of defects and anomalies.
Many hon. Members on both sides of the House deplore the Chancellor's proposal to introduce VAT into some sectors of the building industry. He has argued that there are many anomalies in definitions of repairs and improvements and in determining what is maintenance and what is not. I have been a Member of this place for about 10 years and I cannot remember dealing with a dispute over what is subject to VAT and what is not within the building industry. If there are anomalies, the answer is to remove from the scope of building repairs the work that attracts VAT. The building industry has 400,000 of its ex-employees on the dole queue. It is highly labour-intensive and dependent on small firms.
The Chancellor must know that he has put historic building renovation at risk. Our heritage belongs to us all and it is not a subject of party political bickering. That is why the arrangements for the heritage fund have generally met with approval from both sides of the House. The Chancellor is putting at risk the renovation of historic buildings because of the imposition of VAT, and it is possible that VAT charges will be imposed on thousands of home improvement grants. Over 26,000 householders have applied for home improvement grants in Birmingham. When the grants are made through the city's environmental department—that will happen when the Government allow Birmingham to spend the money that they originally promised to allocate to it—it is probable that each applicant will have to pay £500 worth of VAT.
The deadline of 1 June will lead many people to pay their builders before work has been completed. They will do so in the knowledge that the builder may go bankrupt or may decide to do a bunk. They will know that if that happens they will have paid for work that has not been finished and that they will have no redress. An individual may trust his builder and consider him to be reliable. He may decide that it is safe to pay him before 1 June and that he will get on with the job thereafter, but in many instances there will be considerable uncertainty. That is the position in which the Government are placing many of those who have decided to embark upon home improvements. I am not surprised that hon. Members on both sides of the House have been inundated with representations from the building industry and the councils with responsibilities for home improvements.

Mr. Maxton: Two areas of improvement that will be hit by the proposals of the Chancellor of the Exchequer are, first, the renewing of lead pipes and, secondly, energy conservation improvements. My hon. Friend will be aware that lead pipes are a major health hazard in cities such as Glasgow. He will be aware also that the Secretary of State for Energy is supposed to be running an energy- saving programme. I have no doubt that the Secretary of State for Energy is concerned about the Chancellor's proposals. It is clear that energy conservation improvements will be hard hit.

Mr. Rooker: It is within the knowledge of the House that the Secretary of State for Energy is much opposed to the taxing of energy. We know that he is spending enormous sums of public money advertising on television and in the press to encourage the public to save energy and to be energy conscious generally. Did the Chancellor intend, once again, to knock the policy of his right hon. Friend? Was that the Government's intention? I hope that the Financial Secretary to the Treasury will address himself to that issue when he replies. It is riot an unimportant matter.
The issue of the imposition of VAT on charities has never been satisfactorily resolved. It has been the subject of dispute since the doubling of VAT in 1979. The Chancellor of the Exchequer knows that there would be massive all-party support for the proposition that genuine charities—I emphasise "genuine"—should enjoy VAT relief. The Government have the benefit of advice from the Inland Revenue, Customs and Excise and all the tax experts on the Government Benches, but it seems that they cannot find a way of defining a "genuine" charity for the purpose of VAT relief. If that is the stumbling block, I suggest that the answer is for the Opposition to move across the Floor of the House to the Government Benches and for the Government to take the Opposition Benches. If they agree to that course, we shall find an answer to the problem.
We would be content to revert to the rate of VAT to which charities were subject when the Government took office in 1979. We would agree to revert to 8 per cent. If the Government cannot agree to abolish the imposition of VAT on charities, let us return to the position that prevailed in 1979. I understand that before the Government's climb-down after the Budget statement, the Spastic Society was faced with a £120,000 increase in its VAT liability. One third of that increase will be removed as a result of the Government's announcements. However,


the society will still have to pay an extra £80,000 in VAT. It should be remembered that it already pays a VAT bill of £650,000. Dr. Barnardo's will face a VAT increase of £125,000 as a result of the Budget. The Royal National Lifeboat Institution will find that it will have to pay an extra £45,000. There has been no concession for the Royal British Legion and it will have to find an extra £200,000. That is its estimate of the extra VAT that will be levied upon it. Will the public give their support to these worthy and long-standing charities merely to pay VAT to the Chancellor of the Exchequer? The answer is, "Not on your life."
I shall refer briefly to company taxation. I know that my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davies) will deal with the taxation of manufacturing industry. Many companies have stated since the Budget statement that they will pay more tax as a result of the Finance Bill. It is easy for the Chancellor of the Exchequer to talk about global sums when referring to the reduction in corporation tax and the abolition of capital allowances. However, it is the individual company which pays tax and it is not easy for such companies to say, "What we gain with one hand we lose with the other." It seems that manufacturing industry will, unlike other sectors of industry, pay more in taxation. For example, ICI is on record as stating that it will pay more tax. That is not a candyfloss organisation. It is a company that creates wealth, employs labour and makes things. Those are activities on which the Chancellor of the Exchequer does not seem too keen. The company has considerable exports but it will pay more tax net because of the changes set out in the Budget.
Some will say that it is a good thing that companies are to pay more tax but we must give serious attention to the extra tax burden that the Government intend to impose on manufacturing industry. The money will not be channeled into new investment. It will not be used to create new factories and new jobs. According to the Library briefing, Blue Circle and Thorn EMI will pay extra tax but Marks and Spencer's tax bill will be reduced by £39 million. The service sector, so much beloved by the Government, will enjoy redress as a result of the Budget, but our wealth-creating manufacturing industry, which we shall need when our North sea oil is depleted, will be hit.
Profits on investments will be increased. The Chancellor wants more profits, as we do. The difference is that we want profits wisely spent after a surplus has been made. There will not be sufficient profit to offset the abolition of the first-year allowances when inflation is low. There is a problem here in relation to inflation in the coming years. The Chancellor is committed to a zero rate of inflation; we gather that he still wants stable prices. Certain technical problems—we need not go into them now—will be created for many companies.
Profits on existing capital are being boosted by the Budget, and nobody denies that that was the intention. Every forecaster sees a massive squeeze on company corporate liquidity from 1985 to 1987. Is that what the Chancellor intends? It is clear from his figures that money will be taken into the Treasury for a further tax handout just before the next general election. Does the right hon. Gentleman intend there to be a squeeze on corporate liquidity during the transitional period of the abolition of

capital allowances? Industry should be told whether that is the case. I shall curtail my remarks on that aspect because time is pressing.
I have a point of detail to raise on corporation tax, and we hope that the Government will come forward with an amendment to clause 20. It is clear from subsection (3) of that clause that a gross unfairness has occurred, whether by design or intent we do not know. However, as the matter is referred to in the notes on clauses, it is clearly not unknown.
I refer to the special rate of corporation tax on industrial and provident societies, which is currently 40 per cent. That puts them below the mainstream corporation tax rate of 52 per cent., although they are paying more than the small firms' tax. It appears from the way in which the Bill is drafted that this special concession to provident, industrial, building societies and the co-ops will be reduced to 35 per cent. However, those who are paying 52 per cent. will also have their rate reduced to 35 per cent.
In other words, there is a relative increase in corporation tax on industrial and provident societies. Is that the intention? After all, if both sectors pay the same rate of corporation tax it represents a relative increase if one compares industrial and provident societies with major companies—[Interruption.] That must be the case. If one group has its rate reduced from 52 to 35 per cent. and another group has its reduced from 40 to 35 per cent., although there is no difference in that they both end up paying 35 per cent., there has been a relative increase for one compared with the other. Was that done intentionally by the Government? Did they intend to reduce that relative gap between those two sectors?
I give notice that we shall raise the matter on clause 20 in Committee. While the co-ops have been rather quiet on the subject, the building societies have raised it. It is clear that this rate of corporation tax affects the building societies, which represent a not unimportant part of the nation's economic structure.
Some of the oil taxation measures contained in the Finance Bill were dealt with by the House in a different form in March 1983, before the general election, and other aspects of the taxation arose in a special measure shortly before Christmas. The Tories have had a windfall from North sea oil that no other Administration enjoyed. Since the last year of the last Labour Government, the benefits have been astronomic. Oil production has more than doubled during those five years; the value of oil and gas production in real terms has trebled, from £6·3 billion to £17·9 billion; the contribution of oil to the balance of payments has risen tenfold, from £1·3 billion to £11·7 billion; and tax revenues from oil have increased by about twentyfold, from £0·5 billion to over £9 billion.
The bonus of North sea oil should have been used as a springboard from which Britain could have leapt ahead of its competitors. As our oil wealth has multiplied, other industrial nations have faced escalating energy bills as a result of the 1979–80 OPEC price increases. It should have been our moment to plan for, and invest in, the long-term future of our production base — a theme which the Chancellor denigrates—and it could have been a time when we exploited our good fortune to combat, and perhaps even overcome, the effects on Britain of the world recession.
The Government did the opposite. They increased interest rates when oil made it possible for them to be cut. They raised personal taxation when oil was providing a


vast new source of Government income. The Government slashed public investment when oil was providing opportunities to build new hospitals, schools and factories. The Government intentionally created a slump in the early part of the last Administration and the depression was deepened by the world recession, which they constantly blame for everything.
Oil reserves were used, as they are still being used, to pay the dole bills, when they should have been used to eliminate the dole queues. There is nothing in the Finance Bill to reverse that trend. That is the most serious charge that can be made against the Government. They have no plans for, and there is no prospect of, reducing the dole queues.

Mr. Peter Viggers: What about the national insurance surcharge?

Mr. Rooker: If the national insurance surcharge was such a burden, why did the Conservatives wait five years to abolish it? If it is to be such a bonus for investment and if it has been the major bottleneck to investment and new jobs, why have they waited so long?
Far from leaping ahead of our rivals, we fell into a recession deeper than theirs. Unemployment in the United Kingdom has risen twice as fast as it has in the seven major OECD countries, and it still stands higher than the current level in any of the other major countries. Last year, public sector investment was 25 per cent. below its 1979 level; manufacturing investment fell by over 30 per cent. during the same four years; and company liquidations rose to a record level in 1983, a fourfold increase since the Conservatives were elected to office.
As Britain's domestic manufacturers face the sharpest decline in output this century, the volume of imported manufactured goods has escalated by no less than 20 per cent. For the first time since the industrial revolution, the United Kingdom has a deficit on manufacturing components in its balance of payments. There is nothing in the Budget or the Finance Bill to set that process in reverse.
The Chancellor was talking yesterday about his strategy in the years after the oil runs out, and his remarks are highlighted in the press today. We have had hints that the social services may be cut again. The Chancellor was quoted in the Financial Times this morning as saying that Britain should be able to take in its stride the situation after the oil runs out. I agree, but will we be able to do that?
Consider what the people on whom the Government will be relying when the oil runs out think about the future, the people who are running manufacturing industry, making things, using people and selling goods abroad. Mr. Max Taylor, senior partner in a Birmingham-based chartered surveyors specialising in industrial property, is reported as saying:
The heavy sector of industry in the Black Country—I am talking about the tin-bashers and boilermakers — is still suffering quite alarmingly.
He made that comment after the Budget.
The regional office of the CBI, it is reported, confesses
in private that it is running out of clichés to skate around the uncertainty. Last year it was 'too soon to throw hats in the air.' Now, 'celebrations are still being kept on ice.—
That is happening after this wonderful Budget for the manufacturing sector. It is reported that Sir Arthur Bryan, chairman of Wedgwood, the china manufacturer, who has

returned to almost his pre-tax profits before the recession, said that he believed the national CBI forecasts to he "over the top" and "too London-orientated". That is quite right.
The director of the National Association of Dropforgers said:
To talk about growth is a bit sick.
Heavy manufacturing industry depends on such people to provide massive support for the industry's products. The director of the National Association of Dropforgers also said:
It is just a question of clawing back a little of what we have already lost.
Equally blunt talk came from the owner of a private engineering company in the Midlands, Hi-ton. The Permanent Secretary at the Department of Trade and Industry, Sir Brian Hayes, met the owner when he went to the west midlands on a fact-finding visit. That visit occurred at a time when the sheer devastation of the industry was clear for all to see. An article reports:
Mr. Carter's message was simple: 'Yes, there is business about, but it is because our competitors have gone bust. I cannot see any upturn in the economy. Of course, things are better than 12 months ago.' He laughs: 'They could not get any worse'.
The Chancellor says that we should be able to cope when the oil runs out. The chairman of the Birmingham board of Barclays bank, Mr. Anthony Rudge, said:
Manufacturers may all have the best of intentions but they are not borrowing the money.
They are not borrowing the money to invest. Although Britain should be able to recover when the oil runs out, there is not a shred of evidence that the Government, via the Budget and the Finance Bill, are getting Britain ready for that day. Of course revenues from North sea oil will run out many years before the oil runs out. That will have a different effect on the economy. I do not complain that the lights will go out because we shall run out of oil. North sea revenues will be running out before the end of the decade. As I have already shown, the Government are receiving oil revenues at a rate of £9 billion a year. That was new money for the Government, which the last Labour Government did not have.
The Bill makes some changes in capital transfer tax. The Chancellor has given away £49 million in a Budget dealing with billions. One can say, "An amount of £49 million is not very much." The fact is that none of it is going to any of my constituents or to many of the constituents of my hon. Friends. There is no justification for the cuts in capital transfer tax. Given the fact that, in the past five years, the Government have diminished the tax, I am astonished that they have not abolished it. In the past few years, the Government have made changes when dealing with renewing exemptions. I understand that a married couple who transfer almost £400,000 over 30 years do not pay a penny of capital transfer tax. In real terms, we are receiving less from capital transfer tax now than we received from estate duty before the tax started.
It is not that United Kingdom capital taxes are high. As a proportion of total tax, Greece, Belgium, France, Holland and Denmark impose higher capital taxes than Britain.

Mr. Terence Higgins: Do they pay them?

Mr. Rooker: The right hon. Gentleman keeps intervening from a sedentary position. I am looking forward with interest to his speech defending the Government's attitude in the Finance Bill, defending another giveaway, and a tax handout of £300 million to the


family of the Duke of Westminster. A Financial Times headline stated that one Cheshire family will get £300 million as a result of changes in capital transfer tax. No one denies that during their lifetime the Duke and his successors will gain that amount.
We shall debate the changes in stamp duty in Committee. One third of the stamp duty reduction — £160 million—is on shares, not house transactions. The Chancellor has raised the exemption limit on stamp duty for houses to £30,000. He claimed, as he is entitled to do, that 90 per cent. of first-time buyers will now not pay any stamp duty. It follows, therefore, that nine out of 10 first-time buyers do not gain from the halving of stamp duty. Why does the Chancellor make that further giveaway to one tenth of first-time buyers and the other people who will benefit from that change? It is no good the Chancellor saying that he is doing anything for first-time buyers, because his one argument is cut from under him by the consequences of another change.
The Government have abolished the national insurance surcharge, and the Opposition will not vote against that measure. The Government are aware of our view. My right hon. and hon. Friends have been calling for that change for the past three or four years. With 3·5 million on the dole we are in a different position now from when the national insurance surcharge was first imposed. Under this Government, unemployment has trebled. The tax on jobs would have gone much earlier if the Government were serious about doing anything about jobs. The Government keep saying that they want to ease the bottlenecks and the size of the dole queue. The Bill contains no specific measures to decrease unemployment.
Taxes will increase. The Chancellor has said that unemployment will decrease continuously during the next 10 years. Will that decline start this year, or will it start next year or the year after? What is the base year for that test of the Government's performance? The Government have put forward the Finance Bill as a major and novel Bill. The Chief Secretary made a stimulating speech. I suspect that tomorrow we shall not read a repetition of the nasty piece that Malcolm Rutherford wrote about the right hon. and learned Gentleman in the Financial Times following his speech on the Budget. Mr. Rutherford said:
One has rarely heard such a dismal performance from a Government Front Bench".
I did not hear the Chief Secretary say anything I liked. He merely used more pleasant and less sarcastic terms than he used in the Budget debate.
Last night, the Prime Minister said that the police in this country are superb. If that were true, I reckon the "Old Bill" should have got their hands on the Prime Minister's collar because of the damage she has done to individuals during the past five years in advancing her economic policies. She has put millions on the dole queue. We shall oppose the Finance Bill through its stages, to put the public's hand on the Prime Minister's collar.

Mr. Terence Higgins: The late Iain Macleod was fond of saying that a Budget which looked popular as the Chancellor sat down on Budget day frequently looked different by the time Second Reading of

the Finance Bill was reached. I doubt whether any recent Budget has received such an enthusiastic response as did my right hon. Friend's this year.
Despite the attack launched by the Opposition Front Bench, the Budget and Finance Bill still look extremely good, not least because of the taxes that they abolish and thereby simplify. I say sincerely to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) that the first quarter of his speech was the best that I have ever heard him make. That may not necessarily be true of the rest of his speech, and I disagree fundamentally with a number of points that he made.
It is extraordinary that the hon. Gentleman should have the nerve to ask why we had not abolished the national insurance surcharge before, when he completely avoided the question of why the Labour Government ever introduced such a tax on jobs in the first place. The position then was not the slightest bit different. That tax had an adverse effect on employment. That was so when it was introduced. I am delighted that my right hon. Friend has finally got rid of it in the Budget.
My right hon. and learned Friend the Chief Secretary said that he did not intend to read out the entire Finance Bill clause by clause. We were all glad of that. I do not intend to read out the entire part of the report of the Select Committee on the Treasury and Civil Service relating to my hon. Friend's Budget. The Committee took evidence from the Governor of the Bank of England, the TUC, the CBI, Treasury officials and the Chancellor for some considerable time and received a great deal of written evidence as well. However, the Committee's report is only about half as thick as my right hon. Friend's Finance Bill.
There are a number of points dealt with in the report which are worth commenting upon. I should like to do that and pick up some of the points made by the hon. Member for Perry Barr. The Select Committee has produced three reports in this Parliament on the broad economic structure —the report on the autumn statement, the report on the public expenditure White Paper and today on the Budget. I should like to pay tribute to those who put a great deal of work into getting out the report in time for today's debate.
The Committee picked up a number of themes. The Government have responded to the points that we made in our first report on the autumn statement on asset sales. In today's report, the Committee has returned to the charge about that and remains of the view that to treat the proceeds of asset sales as negative expenditure is a strange way to deal with the problem. The Committee feels that the right approach is to treat them as a means of funding the PSBR rather than reducing it in the first instance. I do not want to pursue that point at this stage, but I want to refer to the comments that the Committee made on the money supply figures.
The House responded in an interesting way to the remarks made by my right hon. Friend the Chancellor of the Exchequer in his Budget speech about the various measures of money—M1, M3, PSL2, "Little MO", and so on. The Committee commented upon that, pursued the matter with the Governor of the Bank of England, and asked whether—if the monetary targets were intended to achieve the Government's intention of conditioning expectations — that was likely to happen when the targets were constantly changed. The Governor of the Bank of England replied:


if both the authorities and the market recognise these changes and the reasons for them it does in fact make the credibility of policy stronger rather than undermining it.
The Committee noted his views on that, and said:
we are doubtful whether the original intention that the monetary targets should have a significant impact on a wider audience, such as trade unionists engaged in wage negotiations, has any relevance now, simply because the monetary targets have been changed so often.
One of my colleagues on the Committee, who shall remain nameless, remarked that people in Grimsby engaged in wage negotiations discussed little else but PSL2, "Little Mo", and so on.
However, there is a serious point. While those targets may still have some relevance to the money markets and those engaged in those technical matters, the original intention that they should have an effect on the broader public has been lost, and that is perhaps regrettable.
Another point made by the Committee was that the Government have maintained for some time — the Committee took evidence on this point — that the revenue determines the amount that the Government can spend. That is spelt out in rather greater depth in the Green Paper that the Government published with the Budget— "The Next Ten Years: Public Expenditure and Taxation into the 1990s." The Government say:
the growth of public spending has, over the past twenty years, been the motive force which has driven ever upwards the burden of taxation, on individuals and companies alike. The Government believes that it is necessary to reverse this process".
I agree with that view, but find it implausible—I think that is the correct word—when at the moment the revenue determines expenditure rather than the other way round. We questioned the Chancellor on this in considerable depth and came to the conclusion, in the light of the evidence, that there was no clear criterion by which the availability of finance was determined. It is merely a matter of judgment. Indeed, the Chancellor himself said that it was merely a matter of judgment. It is therefore difficult for us to understand how the figure which is then taken as a matter of judgment for the level of taxation that can be afforded is effective in restraining expenditure.
The whole budgetary process and the annual sequence of events is such that we do not believe, however desirable it may be, that that is the way the Government act. Therefore, we make a specific recommendation, to which we look forward to receiving a response from the Government, that the House should be told what the firm limits are and the criteria that are used to impose an effective restraint on public expenditure.
In that context, since the Government say that it is the amount of money they can raise through the Finance Bill that determines what happens to expenditure rather than the other way round, I should make a passing reference to the proposed negotiations with the EC. At the moment we have got only what is called a stylised assumption about expenditure on the EC. If, as a result of the negotiations, the amount goes beyond the stylised assumption, will the revenue still determine expenditure, or will it to be the reverse? I hope that we shall be given an indication on this when the Financial Secretary replies to the debate.
Considering the broad picture, the Committee reached the conclusion that, for a number of reasons that we specified, the actual fiscal stance this year is somewhat slacker than it was last year and that the Chancellor, contrary to what he said in earlier speeches when he was Financial Secretary, is not consistently adopting a counter-cyclical attitude to the management of the economy and

in particular to the public sector borrowing requirement. We specify a number of reasons why we think the Government stance is now slacker than it was a year ago. For example, because the change with regard to VAT on imports is a once-for-all measure, the Budget is not truly neutral, but would involve a reduction in taxation in the future.
There are other aspects of the economy that need to be taken into account. Some of us are concerned about the industrial recovery and, in particular, the financial effect that the Budget will have on it. Despite doing a comprehensive tour of the entire picture, the hon. Member for Perry Barr did not refer to this. The banks will have difficulty finding sufficient money to finance economic recovery. There is a clear intention by the Government to fund the public sector borrowing requirement 100 per cent. from the non-bank public.
I should like to concentrate briefly on what to me is the main point in our report. We are particularly concerned about the growth rate of the economy and unemployment. It is important that hon. Members should understand the true nature of our present unemployment. I believe that it is different from what we have had in previous recessions
The hon. Member for Perry Bar referred to manufacturing industry. As a result of the rapid increase in the exchange rate, partly because of North sea oil and the general international situation, many firms have greatly reduced the size of their labour force and cut out overmanning. In doing so they have paid out huge sums in redundancy payments, and they will not readily lake back the people whom they have had to make redundant. Therefore, it will be extremely difficult for us to deal with unemployment.
This problem has not arisen before, but the Budget does something to help. In particular, it removes some of the distortions from the relative cost of labour and capital. It is wrong to say, as was said from the Opposition Front Bench, that the measures in the Budget will not help to reduce unemployment. They will alter the labour-capital cost ratio, and the effect on unemployment should be beneficial. At the same time it is important to have a satisfactory rate of growth in the economy as a whole, In that respect there are several worrying aspects to which we refer in our report. I think that hon. Members would benefit from studying them, given that they are based on the evidence that we took.
We are particularly concerned at the way in which the Government are setting out a policy which is said to be aimed at achieving sustainable economic growth. Yet, when we looked at the Red Book, and in particular when we took evidence of what was happening over the five-year period, we found that the present economic growth rate of 3 per cent. per annum was expected, on the Government's own official forecast, to decline in the last part of the period covered by the Red Book forecast and to go down significantly to less than 3 per cent. over the five-year period. That gives cause for concern when the Government are committed to achieving sustainable economic growth because we find a forecast put forward after the Budget measures which shows the rate of growth going down from 3 per cent.—the present rate—to 2 per cent.
The implications for unemployment are important. Our report says:
officials told us that the 2¼ per cent. average GDP growth assumption for the five years of the medium-term financial


planning period was consistent with declining unemployment levels, since the Department of Employment labour force projections show annual growth of around ½ per cent. per year on average, and on the assumption of productivity growth of 1½ per cent. per year 'there can be a decline in unemployment.'
From the figures it is clear that the scope for any reduction in unemployment must be small. When we consider the Red Book figures for productivity, that point is reinforced, because we find that the improvement in productivity has not been 1·5 per cent. In 1981 it was 3 per cent., in 1982 it was 6 per cent., and for 1983 it is estimated to be 6·5 per cent. That improvement in productivity is to be greatly welcomed.
Firms are now working well below capacity on much smaller labour forces than before. Therefore, it is clear that in any sort of upturn there will be a substantial improvement in productivity. That is to be welcomed, but at the same time it has very serious implications for unemployment. For that reason, I think that the overall fiscal stance—although all the evidence suggests that it is slacker than it was a year ago—is still perhaps not sufficient to ensure that unemployment will be reduced. That is not to say that I am in favour of some sort of massive reflation which would result in a resurgence of inflationary pressures, with a corresponding deterioration in our performance and competitiveness in relation to our imports and exports.
The overall position gives cause for concern. None the less, the specific measures in the Budget are — the phrase has been used frequently and it is right that it should be — very imaginative. My right hon. Friend is beginning to remove the existing distortions in the tax structure. He has got rid of two taxes. That is not a bad score for one Budget. I hope that he will go on doing that, despite the extraordinary way in which the Opposition seem to be against abolishing taxes in any shape or form.
With regard to the specific measures in the Bill, the overall picture shows a considerable amount of careful analysis. My concern is with the overall economic position. My right hon. Friend the Chancellor of the Exchequer will be able to take further measures in future. All Chancellors say that that can be done. One of the virtues of the Budget is the introduction of an element of medium-term tax strategy as well as medium-term financial strategy. It would be good if that were to be extended to other taxes beyond those for which my right hon. Friend has already given a forecast of what is likely to happen to the corporate tax structure. If that takes place, I think we shall see an improvement in the overall tax position. I am sure that we would all like to see it for the benefit of all those who are affected by the Bill.
The Bill is basically good and its intentions are right, but, for the reasons that I have mentioned, we should give particular attention to the outlook not only in the short term but in what the Americans, in that dreadful jargon, now describe as the outyears.

Mr. Robert Sheldon: We heard with great interest the speech made by the right hon. Member for Worthing (Mr. Higgins), particularly as he is Chairman of the Treasury and Civil Service Committee which, after a shaky start, is settling down and has produced its first high quality report, which I hope and expect will be followed by many others. The right hon.
Gentleman dealt with unemployment at some length and that forms the most interesting part of the Committee's report.
My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) made an excellent speech—excellent both in depth and breadth. His arguments, analysis and examination of the Bill will, I hope, be repeated in relation to other parts of the Bill. I for one shall enjoy the comments that I anticipate will come from my hon. Friend who has made a distinguished opening speech.
The Chief Secretary to the Treasury said that this was a big Bill but that much of it had already been discussed because of its earlier printing last year. It is obviously an advantage to have it before the public for a long time, but that can never take the place of the House of Commons. Many of us who are interested in these matters know that, however good the representations that are made to us by those who have a direct interest and personal involvement in the Finance Bill and the way in which the measures that we discuss here will affect industries and concerns outside the House, the fact is that the kind of examination that we bring to bear in the House and particularly in Committee cannot be achieved by any civil servants or industrialists. The examination conducted by the House and the Committee is advantageous and cannot be replaced by any other examination however good or effective it might be.
We have heard from the Chief Secretary today, as we have heard from every Treasury Minister, the usual ritual monetary incantations. Of course, not many of them really believe that nonsense any more. Such relationships between figures are only put forward because they feel that not to do so would be too much of a withdrawal from their earlier commitments. The case for intermediate targetry has now really gone. If one is interested—we all know that the Government are, as everybody has to be—in unemployment, rates of growth and inflation, they can be dealt with directly. If there is insufficient control, it can be dealt with by a variety of measures that do not depend on intermediate targetry. To say that some factors have a bearing on the ultimate objective and then to find that they are not much use in providing any milestones in the journey along that road is not only a waste of time but self-delusion.
It will be in the recollection of many right hon. and hon. Members present this evening that when child benefit was introduced there was an all-party agreement that it should not be regarded as public expenditure. The role of public expenditure has become so encrusted with assertion and dogmatism that that all-party agreement was of enormous importance. Child tax allowances clearly had nothing to do with public expenditure, and when child benefit was introduced in their place in the form of a payment to the child's parents it was agreed that it should not be part of public expenditure.
The changeover took place when the Conservatives were in opposition, and they felt strongly about public expenditure. It occupied almost the same place that it occupies today in the hearts and minds of Conservative Members, but they agreed that the changeover should not affect child benefit, which should be exempt from the ordinary conventions applying to public expenditure and should be raised in line with personal tax allowances. So that as those allowances went up, so would child benefit.
We are now seeing a denial of that agreement, which was intended to give child benefits the same advantages in public expenditure terms as were given to tax allowances.
I hope that there will be just a one-year interregnum, as we had a one-year interregnum when personal allowances were not uprated in 1981, and that we shall return to the concordat that was agreed in 1977. I hope that the Financial Secretary to the Treasury will confirm that that is a reasonable hope.
The Chief Secretary referred to the measures on the control of foreign companies and on offshore funds. We are pleased to see those in the Bill, though they do not go as far as I should like. However, we can debate them more fully in Committee.
The right hon. and learned Gentleman also mentioned the Ramsay case. The implications of that case were unclear and the Chief Secretary's comments will have clarified the minds of those who have responsibilities in these matters about the position on covenants, leasing and transfers between groups of companies. The most important point made by the right hon. and learned Gentleman was that assessments that have been agreed will not be reopened. I am sure that that assurance was greeted with a sigh of relief by a number of individuals, companies and organisations.

Mr. Moore: This is a critical matter and I am sure that the right hon. Gentleman would wish to correct the record. Reference was made to Furniss v. Dawson and not to Ramsay.

Mr. Sheldon: Yes. I apologise.
The right hon. Member for Worthing mentioned the work on unemployment of the Select Committee on the Treasury and the Civil Service. Paragraph 66 of its report said that on the Government's GDP assumptions, annual growth and the assumptions of productivity growth, the scope for any reduction in unemployment must be small. The Committee was showing restraint, because what it really meant was that unemployment will increase. That is the blunt conclusion of its report.
The right hon. Member for Worthing seemed to accept that when he spoke about structural change and the fact that firms that have shed workers will be reluctant to take them back.
I think—though I am not sure—that my conclusion is different from that of the right hon. Gentleman. Millions of people are considered unemployable when, over the past 40 years or so, they were thought to be highly employable. We have to consider what the state should do and in what circumstances it should move in.
The structural change will be difficult to bring about under a Conservative Administration because the economy has become set in the Government's mould after five years. We have seen a counter-revolution from everything that happened in the post-war years and the creation of an expectation that that revolution will continue.
There has been a reduction in the hopes of those who looked forward to an expanding economy to which they had much to give and which might have produced the dynamism that, unfortunately, we are not likely to see. High unemployment will continue in the Britain of the 1980s. The opportunities resulting from North sea oil will not be taken up. Britain will be characterised by the abolition of exchange controls, under which £11 million of our money pours overseas each year.
We have seen the emasculation of capital transfer tax and capital gains tax. My hon. Friend the Member for Perry Barr rightly pointed out that the amount likely to be raised in that way over 10 years will become less. The higher rates of income tax are part of the new structure brought in by the Government. We shall be a financially rather than industrially oriented country. The 4 million unemployed will not find jobs in a financially oriented Britain.
As my hon. Friend pointed out, those who consider the large sums of money that have been handed back to those with great wealth find it astonishing how, after all the years since estate duties were introduced, those vast estates can continue year after year, decade after decade and almost for century after century. One does not have to be a great believer in equalisation or some form of egalitarianism to realise that those great estates have little justification in the Britain that most of us in the House think would be sensible.
Conservative Administrations have dealt with estate duty, capital transfer tax and other measures. By emasculating and virtually destroying them they have retained the hereditary principle of wealth that is one of the weaknesses of our industrial and economic life.
That approach has been continued in the capital transfer tax changes in the Finance Bill. Investment income surcharge is being abolished so that unearned income will be treated in the same way as earned income for the first time since 1907. Investment income surcharge was first imposed at a shilling in the pound for unearned income and at 9d in the pound for earned income. There was a reasonable differentiation between those who earned their living from their own toil and those who did not. It would make as much sense in Britain in the 1980s—in some ways it would make more sense—to have a distinction between earned and unearned income.
Today more cost is involved in earning a living compared to staying at home than in the early years of the century. At that time it was possible to walk down the road to a factory and to earn a living there. The extra costs of earning that living were relatively small. Travel, whether by car or public transport, is now a substantial element in the cost of earning a living. Food and clothing are other expenses. People have unsuccessfully tried to claim some of those expenses as necessary and exclusively incurred while earning a living. Although they have lost their cases they have had the modest advantage of having their earned income taxed in a way which took some account of the cost of earning a living. All that has gone.
We are witnessing the virtual abolition of capital allowances. When capital allowances are reduced to 20 per cent., industry is merely allowing for the writing-off of assets. Service industries, which do not invest as much in machinery as manufacturing industries, are being given an advantage. At paragraph 58 of its report, the Treasury and Civil Service Select Committee says:
we have been told repeatedly that the MTFS is designed to reduce inflation and hence interest rates, in order that investment expenditure might flourish. Now, while retaining the MTFS, tax changes have been made which will have the effect of making investment more expensive at the margin.
Investment will be more expensive at rather more than just the margins because 100 per cent. tax allowances mean that it is possible to spend substantial sums of money on new investment. That, rather than replacement investment, is the best form of investment in an expanding


community. However, the change will mean that manufacturing industry will not benefit as much as financial and other service industries.
Our big problem is that the City is only down the road whereas Ashton-under-Lyne, the midlands, the north and the north-west are far away. The Chancellor has a distinguished City background. I only wish that he had a distinguished industrial background, as he has failed to understand the wealth that industry has created. The City's advantage over the provinces is compounded by the fact that many Conservative Members live in areas that are remote from the country's manufacturing centres. When I walk around the area which I have the privilege to serve, I see the enormous distinction between the advantage given to one part of the country and not the others. People in the more favoured areas are no more able and do not have extra talents; they just happen to be in the area which has a large and successful financial centre.
I do not deny that the City of London is valuable to us. It produces a valuable return on investments overseas and from its insurance services, banking and trading. It is efficient and valuable. If we were a country with a population of 5 million we could happily settle for that and be prosperous, but we have a population of 55 million and we cannot earn our living solely from the efficiency of the City. When we distort our taxation, financial arrangements and the way in which we operate to serve one part of the country, valuable though it may be, to the detriment of the rest, we see some of the damage that is being done and perhaps grieve accordingly. The Treasury and Civil Service Committee, in paragraph 61, said:
We believe that of necessity the declining oil revenues will need to be replaced with increased manufacturing exports if future strains on the balance of payments are to be avoided. No doubt, the service sector will also make some contribution, but many services are not internationally tradeable.
That is correct. The trouble is that there has been an enormous rise in the revenue and production of North sea oil, and that was when we should have done so much more for manufacturing industry and the manufacturing base in the country. People who say that the oil is still coming and that there is plenty of time forget the most important factor. It is when the increase in the revenue occurs that one has the surplus money. When a plateau is reached, even if that plateau were to be continued indefinitely, it becomes one of the stable factors of the economy and difficult to change. It is in that upturn that the imagination should have been used, when the finances were available to do so much more for manufacturing industry. Even though the decline may be for a long period, as I think is possible, at any rate there will not be the opportunities that were presented to us in the past few years.
Manufacturing industry is of great importance. Services are not internationally traded, a point made in the report of the Treasury and Civil Service Committee. We can hand-finish one another's laundry effectively and have a high level of service, but that is not the trading sector that is required. Manufacturing industry has an importance, not only because of its size and its international trading. It has what I call a multiplier effect. One and a half times the amount manufactured is attributed partly to the service sector that is involved in that manufacturing industry. There will always be a service sector based upon the import of Japanese cars, videos, or whatever the goods

may be. If one has one's own manufactured sector, that service industry will be based largely on that manufactured industry.
Sir Terence Beckett has spoken rather more clearly than at any time since his bare knuckle speech of five years ago. In the latest edition of the CBI News of 24 February 1984, he says:
I have written to the Chancellor of the Exchequer on a subject which concerns us all — the importance of manufacturing to Britain. My reason for doing so is the concern I feel over remarks Mr. Lawson made in the House of Commons recently. He said he could not understand the selective importance some Members attached to the manufacturing sector.
It continues:
I am concerned that one or two prominent figures have gone so far as to suggest that Britain's brightest future lies in becoming an up-market service station for our more successful overseas manufacturing competitors. Therefore three quarters of all our value added in exports is attributable directly or indirectly to manufacturing. At the last NEDC meeting I was forced to speak out sharply against those who support the school of thought that United Kingdom manufacturing industry is on the way out. Our loss of market share in manufacturing is not inevitable.
That is a forthright statement. Sir Terence Beckett has been under great political pressure, as we know. We know and understand the political pressures that some people in industry have to face. Nevertheless, he has come out more clearly than he has done for many years. This is something that we must take into account. We must look for compensation to be given to industry for some of the savage changes made to it in the Budget.
We once had a scheme for plant and machinery. We had an investment grant scheme, which was very good. However, the bureaucrats got at it and the large chemical plants got an enormous amount of investment grant, which was nonsense. Nevertheless, the idea was basically correct, that grants should be given for the acquisition of modern plant and machinery, because it is through the very latest plant and machinery that Britain can train a highly skilled work force. Therefore, such modern equipment should be given priority over other forms of investment.
It is claimed that the Budget is neutral. That is the trick of the Budget because, as has been said, it is not neutral. Of course, if corporation tax is reduced and the investment income surcharge is abolished in a strictly neutral Budget someone else must suffer. If that sort of money is given, there must be a gain from someone else. As we well know, in practice a very sensible trick was carried out. I refer to the pre-payment of VAT on imports.
Imports are not liable to VAT until they are sold on. However, by ensuring that the VAT is paid almost immediately on importation, £1,200 million will find its way into the Chancellor's coffers. I agree that that should have been done long ago, but we must also ask whether that beneficial change, which involves collecting taxes earlier than before, could be extended. What about the prepayment of certain taxes on banks, for example? Do the Government have something in mind? What about oil taxation? After all, we have advance petroleum revenue tax.
There is also the possibility of the earlier collection of duty on tobacco and spirits. However, the Government's new practice with VAT is odd compared with previous Finance Bills, when they have deferred the duty on tobacco and spirits. Instead of getting the money earlier from duty on tobacco and spirits, they have deferred it.
Thus, in the one case they have deferred duty, and in the other they have advanced it. They should get their act together. After all, if they are to continue this sort of operation, they will need some of that money in their succeeding Budgets.
The change in life assurance is wholly sensible. The tax avoidance industry was making far too much out of life assurance. The number of pages that had to be put into the Finance Bill every year was ridiculous, but was necessary to stop the schemes thought up by clever people. Therefore, that change is sensible. I also appreciate some of the other simplification measures introduced by the Chancellor. However, as some of the nonsenses are demolished, the biggest nonsense of all remains towering above all the others. I refer to mortgage interest relief. If we get rid of some of the other anomalies, the £2·75 billion it costs us appears even more anomalous. It is common ground that some advantage should be given to people who buy their own homes. However, it is nonsense to provide vast sums to people to overhouse themselves and so gain advantages not at the basic rate of tax, but at the highest rate. Trading up seems to be a speciality of the British housing market, but it is a bit of a nonsense and is created by the excessive mortgage interest relief.
I turn to the question of VAT anomalies. Much as I disagree with it, it is one thing to broaden the tax base, but it is another to set about changing anomalies. One thing about anomalies is that people get used to them. We get used to paying one rate of tax when we go to a restaurant and another when we take away fish and chips. New anomalies are being created and people will not know where they are. They will cause immense dislocation and resentment. I am looking forward to the debates on the VAT changes on the Floor of the House when we shall discuss at what stage VAT becomes payable.
What about one of the more obvious anomalies—the hot pie and sandwich bar? When does a hot pie become a cold pie? Many places serve both hot and cold pies. I am sure that we can buy both in the House cafeteria. Enormous new problems will be created and the Government will look ridiculous, to no advantage.
Our main task is to restore society's expectation of the beliefs that it had a number of years ago. We should not concern ourselves excessively with efficiency if that means losing too much humanity. We must find a balance. The Labour party, in its best moments, offers and insists upon an efficient, productive and energetic community, as well as one in which each is responsible to the other. The Government do not adopt that philosophy. They may have to give way to a party that does.

Mr. Graham Bright: I should like to reflect on small businesses. I welcome the Bill, first because of the decision to continue the reform of personal taxation. Everything and anything that we can do to decrease personal taxation and encourage people to save is important if we are to encourage people to consider starting their own business. It is crucial to encourage people to start in business.
That argument has always been clear to the owners and founders of small businesses. They have had to find the resources to set up and operate their firms in a world stocked with taxes designed to deter them. Even when they succeed they have, until recently, faced the prospect of surrendering a heavy proportion of their achievement to

the state via capital gains tax, corporation tax, capital transfer tax and, when they retire or sell their business, investment income surcharge.
The indexation of capital gains and capital transfer taxes has drawn their teeth. I do not doubt that increasing the retirement relief under capital gains tax to £100,000 and cutting the highest rate of capital transfer tax to 60 per cent. will alleviate the position still further.
I am sure that my right hon. and hon. Friends on the Front Bench will understand when I say that further reforms are necessary. We need to think ahead and perhaps consider integrating income tax and capital gains tax. We should aim to replace capital transfer tax with an accessions tax.
Not only has the burden of heavy personal taxation threatened the survival of small firms, but our system of company taxation has favoured the allocation of capital to large companies because they alone qualify for the allowances. The reliefs available for savings in insurance and pension funds have too often channelled resources into the hands of the major financial institutions. This has made it much easier for them to lend to invest in property or in Government securities or in the equity and loan stock of companies quoted on the Stock Exchange. I am sorry to say that all too often it is the small business and the small company that have been left out when they have considered making investments.
The Chancellor's decision to phase out capital allowances as part of a programme to cut the basic rate of corporation tax is a major step in the right direction. It will permit a better allocation of capital resources within the economy, based on the respective performances of the small, the medium and the large firms. We shall have rates of taxation for our companies that will be considerably lower than those of our main competitors and one of the major distorting factors that has encouraged inappropriate investment will be removed. It is this inappropriate investment that I would like to consider for a moment.
All too often, small companies, which do not have the flexibility of large companies, have been forced to make what I can only describe as irresponsible decisions to make rash investments at the end of a financial year to avoid corporation tax. Sometimes they have not necessarily invested in equipment that could improve productivity or further their business. They might even have invested in larger desks or bigger motor cars. I believe that anything that we can do to reduce corporation tax win help companies to make better decisions and better use of internally generated funds.
I ask my colleagues on the Front Bench not to lose sight of the enterprise bond scheme, which I have twice asked them to consider and which would allow small firms to deduct these costs from taxable profits so that they could plan in future years to make investments of their own capital in their own firms. It is very important that we encourage that as much as we possibly can.
The redistribution of taxation in these and other areas has, I believe, a compelling logic. It makes the system simpler and fairer. It cuts business costs and it removes distortion between businesses of different sizes, and that is very important. I am sure that my hon. Friends, who are as committed as I am to seeing small businesses prosper, will recognise just how helpful this will be.
I should have liked the Bill to refer to the loan guarantee scheme and ensuring that this becomes a permanent fixture, because it has made a major contribution over the


last few years in getting small companies off the ground, particularly those that were perhaps not quite as viable as many banks would have liked. Despite the fact that we have a report which shows that this scheme has lost money, in cost-effective terms for jobs it has been very cheap—about £1,300 per job provided.
I support the Bill because it applies principles of simplicity and fairness across the board. It offers a better balance between public spending and private prosperity, and I believe that it will keep state expenditure in check and encourage free enterprise. That is the right strategy for recovery, as indeed the people of Britain have twice recognised. Economic growth without inflation and with a lower tax burden can be achieved, and this Bill will help to move us closer to that objective.

Mr. Brynmor John: I thought that the hon. Member for Luton, South (Mr. Bright) apart from what I considered to be a somewhat arid view of the British economy, was making an interesting speech until he delivered that encomium about this Finance Bill applying fairness across the board. I really wondered whether he had read the right Bill or come into the right debate. Frankly, in another context it would have been called a video nasty and legislated against accordingly.
This debate started engagingly enough with the Chief Secretary if not in top form at least in the 2·1 bracket by his standards, giving a quite entertaining and vivacious account of the Bill that he is preparing to pilot through Committee. There were two startling blind spots in the right hon. and learned Gentleman's speech—so startling that I wonder whether he has understood the consequences of the Bill throughout the country.
Clause 10 relates to VAT on home improvements. The Chief Secretary said that we did not need to worry about that because builders, through the national insurance surcharge relief, would have sufficient benefits to compensate. Quite frankly, the builders were never my worry. In one way or another, they will always pass on the increased cost to the customer. My worry, and that of many people throughout the country—especially in the older industrial areas — is the effect upon the person trying to improve his home. The Chief Secretary said not a word about that.
As I said in the Budget debate, which was largely ignored, the effect is twofold. The Government have cut improvement grants from 90 per cent. to 75 per cent., and they have imposed 15 per cent. VAT on home improvements. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) estimated that that would mean an additional £500 VAT per home improvement. It will increase the amount that a person must pay from his pocket towards home improvements from £10 in every £100 to £28·75. That is a staggering increase—which, frankly, the Chief Secretary did not appear to comprehend. That is the gravamen of the charge against the Government.
We are not concerned with whether there were anomalies — anomalies are present in all financial systems. It is the Government's job to iron them out without undue difficulty as best they can. In seeking logic in this case, the Government are imposing hardship on many people. It will be an incentive to the black economy.
My hon. Friend the Member for Perry Barr mentioned the current practice of builders asking people to pay in advance for work to beat the VAT. I know of someone who, this week, was asked by a reputable firm — it could have been a different firm—to pay in advance to avoid VAT. There will be hundreds of cases of people who, in good faith, pay for work but then find that the firms go into liquidation or default.
The Government are encouraging the black economy, rather than discouraging it. They are giving it legal sanction. There will be many cowboy operators in the home improvement area. We have struggled hard for many years to improve standards. Now, cowboy operators will offer a quick deal for cash and will say, "Do not ask too many questions about the bill or about the origin of the materials." The Government should consider the matter again.
I am glad to note that my old friend and adversary, the hon. Member for Croydon, South (Sir W. Clark), to whom I did not give a stroke on the last occasion, is here to risk temptation a second time.
I was speaking recently to a representative of a housing association which specialises in new build and refurbishment. He estimates that 6 per cent. will be added to the expense of refurbishing every house because of the VAT imposition proposed by the Government. That is something that the Government cannot wish away. Bearing in mind the plaudits which the Government have given to housing associations, they should give most careful consideration to the effect of the imposition. That will be one of the matters that they will have carefully to take into account when the Bill is considered in Standing Committee.
An argument is developing about thresholds when set against an increase in child benefit. In a sense, I am relieved that a debate is starting on the issue, because when the Budget statement was delivered, the Government were saying that a decision did not need to be taken until the May RPI figures were announced, and that they would not be taking a decision until June. The effect of their response was that we should not be worrying about the matter at such an early stage.
It seems that the Government have abandoned their earlier position. That was apparent from the speech of the Chief Secretary to the Treasury. The change has come, logically, because of the chain of events. The child poverty lobby has made it clear to Members on both sides of the House that there is a great deal of child poverty in Britain and that the greatest hardship is faced by families with young children. It argues that the hardship is best alleviated by increasing child benefit.
The Chancellor of the Exchequer has boasted about the number of people whom he has lifted out of taxation by increasing thresholds. My hon. Friend the Member for Perry Barr has observed that earnings drag will bring them back into taxation during the year and that the Chancellor's claims are pretty illusory. However, 850,000 taxpayers will be removed from taxation during the early part of the year. Fewer than one in eight of these current taxpayers has children, so we shall not benefit families with children merely by lifting thresholds. We shall disproportionately benefit married couples or single people. The poverty trap has a greater effect on families with children. It consists of the interaction of high marginal tax rates with benefits such as FIS and housing benefit, and marginal rates are greatest among families with children. About 80 per cent.
of those on marginal tax rates above 50 per cent. are families with children. They are not, as most would imagine, single people.
The number of people with children who are removed from the poverty trap is a crucial test of the effectiveness of the Budget and of the Chancellor's sincerity in talking about the Government's concern for lower-paid families. The Minister for Social Security told us in a parliamentary answer on 2 May that up to 20,000 of those within the band affected by the poverty trap would be removed from it as a result of the Budget. We know that the ebullience of the Minister rather outweighs his arithmetical calculations.
When the Select Committee on Social Security considered the matter, it found that the figure should be reduced to 10,000. The civil servant who gave evidence to the Committee said that the number of persons removed from the poverty trap would be about 10,000. That figure is fairly small, because the tax threshold, even at the new level of about £60 a week, is less than the level of earnings which most people in the poverty trap receive. This means that the threshold will have to be raised considerably to make an impact on the poverty trap, and that will take several years to accomplish. In other words, what the Chancellor has made a cornerstone of his Budget is admitted by the civil servants in his Department to be something that will not take effect quickly, will not give immediate relief to families with children and will not deal with the central problem of poverty in families.
Another amazing blank in the Chief Secretary's speech occurred when he spoke about the interaction of taxation and social security benefits. There must be a greater realisation that we must maximise benefits by having the best interaction of taxation policy with benefits. The right hon. and learned Gentleman does not appear to realise that the Secretary of State for Social Services has, as one of his three Beveridge-like inquiries into the social security system, set up an inquiry into child support and child benefit which takes no account of taxation policy.
The Chief Secretary did not seem to understand that that inquiry will go on in total isolation from the effect of taxation policy on the welfare of children. I refer him to page 91 of the Select Committee report, where the distinguished economic adviser to that Committee said:
The failure to connect expenditure and revenue is particularly glaring in the case of social security benefits and income tax concessions, since the two are to some degree a substitute for each other and should be considered together within the framework of fiscal policy towards households.
In the inquiry which the Secretary of State for Social Services will commission into child benefit and child support, will taxation policy and the provision of maximum benefit for families be considered in its fiscal as well as in its social security aspects? That badly needs to be done.
The Chief Secretary also erred when making a stark contrast between child benefit and thresholds. It was as if he was saying, "One either increases thresholds or increases child benefit, and there is nothing in between, save the cost of living increase," which, as we know, will be the likely outcome of the June consideration of the benefit.
There are, however, intermediate steps by which one could give benefit to families without adversely affecting married couples or single people. The first way would be to increase child benefit by the same index percentage as one increased personal allowances, by 12 per cent., so giving an extra 95p a week on top of the 35p to make good the cost of living increase.
The second way—a way that should commend itself to the Chancellor, in that it would be financially neutral— would be to uprate the tax threshold by the 5·3 per cent. necessary to compensate for the rise in the cost of living. That would mean that single people and married couples would be in exactly the same positions as they were previously. The surplus, over and above what had been paid out to index that, could be used towards increasing child benefit.
The result would be startling, even if one was considering only a married couple with one child, for by doing that, one could in a full year increase child benefit by £2·05 over the 35p, and still give that same couple 87p a week in lessened taxation because of the indexation. In other words, for everyone who has a child, raising child benefit is incomparably the best way to benefit families and reduce the burdens on them in industrial Britain today.
I must ask the Minister, because it has become part of the debate, whether, as reported in The Sunday Times last Sunday, there is any proposal to means-test child benefit. That rumour was current at the time of the last general election. The Prime Minister answered me then in these words:
There are no plans to make any changes to the basis Oil which the benefit is paid or calculated.
If the Government are considering means-testing child benefit, the Prime Minister's honour and word would be involved and she would have been elected on a false prospectus. She and the Government should make their position clear at the earliest possible moment.
While we continue to consider taxation in a vacuum without considering its effects upon the people, we will condemn many to poverty. Even on the Government's figures and expectations, there will be inevitable casualties in the Government's drive to make industry leaner and fitter. The Government should take special care of the future and welfare of those people and of their children. We do not want to perpetuate the injustice from generation to generation. Because the Finance Bill shows no understanding of that point, I hope that it will be fiercely resisted.

Finance (No. 2) Bill

Mr. Colin Shepherd: I am grateful, Mr. Deputy Speaker, for the fact that I have the opportunity to catch your eye, because I know that many hon. Members wish to speak, and therefore I hope that the hon. Member for Pontypridd (Mr. John) will forgive me if I do not follow his wide-ranging speech too closely.
I generally support the Bill. It is challenging, stimulating and thought provoking and in the long and short term it will benefit the nation's economy. That is a broad-brush approach.
I have a specific interest tonight. The Bill applies globally to all industries and people. I find parts of it difficult to sell. I am not particularly enamoured of value added tax being applied to building operations, but I recognise the strategy behind that.
There is one curious aspect of the Bill which does not apply globally; it applies geographically and to a specific industry. I refer to the curious treatment of the cider industry which is dealt with in clause 1 and to which I wish to direct my remarks. I am glad that the Minister responsible for excise duty is in the Chamber, so that my message will reach where I want it to go.
In his Budget speech my right hon. Friend remarked:
As for the rest of alcoholic drinks, cider, which increasingly competes with beer but attracts a lower duty, will go up by 3p a pint."—[Official Report, 13 March 1984; Vol. 56, c. 302.]
It might be 3p a pint to the Revenue, but it is 5p a pint over the counter. That is a substantial increase in duty for a commodity whose popularity is growing modestly. The implication is that somehow cider is unfairly competing with beer. I cannot understand that. On average, in January 1984 pubs sold best bitter at 66·3p a pint, ordinary bitter at 60·5p a pint and draught cider at 69p a pint. Because more than 50 per cent. of cider is sold through outlets owned and controlled by brewers, brewers set the price. There is no question of cider competing unfairly in terms of price.
I shall put consumption into perspective. Between 1979 and 1982, beer consumption was down by 149 million gallons. That may have been bad news for the beer industry, but cider consumption increased by 13 million gallons. No one can say that cider is moving in to take over from the market from beer because cider has a competitive price. Cider is winning in its own right. Clearly, it is not substituting for another product.
I wonder about the curious treatment of cider and whether there has been some nobbling by the beer industry.

The Minister of State, Treasury (Mr. Barney Hayhoe): indicated dissent.

Mr. Shepherd: My hon. Friend shakes his head. On 8 March—a significant date—at a press luncheon the chairman of the Brewers Society said:
For reasons that have never been explained, cider at the same strength as beer currently pays tax at only one-third of that on beer. This is unfair for the two drinks are clearly in competition.
I do not believe that they are in competition. I believe that, somewhere along the line, the beer lobby is getting at the cider industry. I have a specific interest in the cider industry, because more than 50 per cent. of the cider

consumed in this country, and an enormous amount that is exported, is made in Hereford. That is a fine employment base.
There is no comparison between the methods used to make those drinks. They employ vastly different manufacturing techniques and raw materials. Cider makers have nowhere near the economies of scale enjoyed by brewers. The cider makers of Hereford, who are not owned by the brewers, are slightly different from the Somerset cider makers. I have much sympathy for the Somerset cider makers, which are owned by the brewers, and are, therefore, nobbled in their approach.
A solid slug on cider has been imposed before. In 1976, under a Labour Government—I am sorry that the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) is no longer in the Chamber, because I believe that he was the Chief Secretary to the Treasury at that time — a 3p special cider tax was imposed. Consumption was slashed, and profitability in the cider industry slumped. It was 1982 before the position was redressed. I had hoped that the lessons were learnt then. I raised those matters during Adjournment debates. At that time, it was predicted that Hereford would consequently lose 160 jobs, and 140 jobs that were expected to be created were not created. That was exactly what happened.
On hearing this curious news about an extra 1p being imposed on cider than was put on beer so that cider was singled out for special treatment, my antennae twitched and my hackles rose. I took recourse to my calculator. The press release on anticipated revenues shows that in each year £5 million extra will come in. The increase of 2p a pint for beer and 3p a pint for cider will total £15 million. If the lesson of 1976–77 is anything to go by, consumption will fall. If it decreases by 7·35 million gallons — a mere 11 per cent. — the Chancellor will receive no increase in revenue. Therefore, the cider industry may be in bad shape because of lack of investment, with employment jeopardised and confidence going, and without any real increase in revenue. That is specific to the cider industry.
I ask my hon. Friend to consult his right hon. Friends —I am delighted to see the Chief Secretary back with us, because I know that he takes this matter seriously—and bring forward their own amendment to clause 1 in Committee to put beer and cider on level pegging so that we know where we stand and this curious little anomaly in regard to cider is not left outstanding. In all justice, I do not think that it can stay.
In opening the debate my right hon. and learned Friend said that one of the purposes of the Bill was to improve prospects for jobs. I should hate to think that for the measly imposition of an extra 1p per pint on cider we would jeopardise the cider industry and get no revenue from it.

Mr. Archy Kirkwood: I hope that the hon. Member for Hereford (Mr. Shepherd) will not take it amiss if I do not follow him in his dissertation on the various brews concocted in his constituency. I look forward during the many long hours in Committee upstairs or downstairs to discussing the relative merits of what is made in Hereford as opposed to the beverages that are made in Scotland.
This is the first Budget for which I have been present. I have been told by my Chief Whip that lack of knowledge or experience is not considered a handicap in these


debates. A fresh eye on the way Budgets are conducted may not be a bad thing. My view, for what it is worth, is that the Prime Minister put her finger on it when, addressing the Conservative central council in Birmingham, she dubbed the Budget a true Tory Budget. One does not have to look far beyond the presentational niceties that the Chancellor demonstrated to determine that the Budget is unfair with the shift to indirect taxation and the way in which it has been rigged at the expense of the poor for the benefit of the rich. That is the basis upon which I start.
Many significant social policy questions have been left unanswered. For single parents, the unemployed, the poor who are in work, the disabled and the elderly, there was very little good news in the Budget. The introductory paragraph of the report of the Treasury and Civil Service Committee, which referred to the need for reforming the way in which Budgets are considered, is not misplaced. I hope that the report of the Armstrong committee, which reflected the work of the Institute of Fiscal Studies, will not languish gathering dust much longer. There is increasingly a case for considering reform of the Budget procedure fundamentally.
Cuts in housing benefit, a necessary social service, were announced towards the end of last year. Through those cuts, £185 million is to be shaved from the social security Budget. I was astonished that that tax cut was not introduced as part of the Budget. I am confirmed in my view that Budget procedure should be reviewed when I find that social security upratings are not announced in the Budget but must await the retail price index figures for May and June. All that leads me to the conclusion that Budgets are out of date and that the Budget procedure should be substantially reformed.
From my assessment of the underlying assumptions in the Budget, I think that the Chancellor is living in the same situation as Alice in Wonderland. When we look at his short-term inflation forecasts and contrast them with the trends that we have seen in industrial earnings, we find that his forecasts for inflation are optimistic, to say the least. His growth forecast at 3 per cent. is extremely optimistic. His whole strategy is based on continuing and sustainable growth in the gross domestic product, and I do not think that that hope will be fulfilled. His own party will—and should—show little mercy in its subsequent treatment of him if history proves that his underlying assumptions were wrong.
The Bank of England Quarterly Bulletin recently described the present recovery as "different but durable". I study the various charts and graphs as a layman, and they seem to show that the recovery is exceptional only to the extent to which it is feeble and unsustainable. The Chancellor will be proved right or wrong in the course of time, and I look forward to continuing debate in the House on these matters.
Only this morning I read for the first time the report of the Treasury and Civil Service Committee on the 1984 Budget. Some of the contents of the report repay very careful study. I refer in particular to paragraph 5. The right hon. Member for Worthing (Mr. Higgins) said that the Government have a stated policy that revenue should determine expenditure and not the other way round. The Green Paper, dealing with "The Next Ten Years", spells out the reasons for that policy. It says:

The growth of public spending has, over the past twenty years, been the motive force which has driven ever upwards the burden of taxation on individuals and companies alike. The Government believes it is necessary to reverse this process".
Indeed, any sensible person would agree that revenue should determine expenditure. But in a stiff cross-examination the Chairman of the Committee, the right hon. Member for Worthing, asked the Chancellor:
On what criteria do you determine the level of taxation?
The Chancellor was forced to reply:
That is a matter of judgment.
That is not a good enough answer, even to my untrained mind.
In paragraph 7 the Select Committee says:
If there are no clear criteria by which the availability of finance is to be determined and it is merely a matter of judgment, it is difficult to understand how the figure for the level of taxation can be effective in restraining expenditure.
That is what the Government are supposed to be doing. The paragraph continues:
The Chancellor implies that the old policy of expenditure determining revenue has already been reversed. But it is difficult to discover what the new mechanism is or how it is applied in practice during the course of the financial year.
The Select Committee was right in highlighting the absurdity of the position. It came to the conclusion— and in studying the report I felt that it was right—that expenditure has determined taxation despite medium-term financial strategy in the recent past, and that position should not be allowed to continue.
I notice with interest that the Select Committee took the view that the fiscal stance that the Government had adopted over the past 12 months had somewhat slackened. The Tarzan approach of the Chancellor to the fiscal aspects of monetary constraints is thereby slightly knocked into a cocked hat.
The Select Committee's report, in the section entitled "The structure of the Economy" points out that the tax changes that have been made will have the effect of making investment more expensive at the margins. If that is the case, that will be seen historically to be a mistake. Alliance Members have the consolation of knowing that the TUC and the CBI confirm our view that there is a great need at the moment for an increase in public sector capital spending. Paragraph 55 of the report says that the President-elect of the CBI expressed the hope that the Budget would provide an opportunity to bring
… about the reduction in what in industrial terms we call current expenditure and ensuring a bigger share of the total available for expenditure should go into the capital account".
That view would find favour on both sides of the House and I regret that the Chancellor did not reflect it.
The Select Committee's report on the TUC's evidence is in a similar vein. It says that the TUC adopted a similar stance that increased public capital spending would help significantly to strengthen the industrial base. Interestingly enough it quoted the General Secretary of the TUC who said, I think somewhat reluctantly,
On that particular issue, which I think is illustrative of a more general issue, the answer has to be yes, we do certainly think it is desirable"—
that a joint approach could be made to the Government by the CBI and the TUC.
We have had exchanges with the CBI within the overall NEDC context in terms of staking out new ground. We have differences about current expenditure but there are areas where we could jointly say to the Government 'This makes sense to both sides of industry.'
I was interested to notice that Mr. Geoffrey Chandler, in the most recent "Three Banks Review", reinforces the


view that is taken both by the TUC and the CBI. He went on to conclude that the political dog fight, the class based and adversarial politics that we have experienced in British industry since the last war, has done nothing at all t0 expedite growth and prosperity in Britain.
But the most damning indictment that the Select Committee has of the Budget strategy is based on the fact that it took the view—to which the right hon. Member for Worthing adverted—that there was no sustainable growth in his medium term financial strategy when one looks at the small print. That truth will dawn slowly in the cold light of morning over the coming weeks and months. That is an indictment of the Government's policy, because if it is true the prospects for unemployment are extremely bleak. The increase in productivity that we are experiencing, together with the decrease in growth that we shall experience over the medium term, will have dire consequences for unemployment. It is ridiculous that the Government have not done more in the Budget about the unacceptable level of unemployment in Britain.
One or two matters of detail have had an impact on me as a constituency Member as well as the Liberal spokesman on taxation. One is the impact of the increase in petrol prices and vehicle excise duty on rural areas. The Government must accept that although general indexation of some duties is right, the burden of some increases is unfair and discriminatory on those in rural areas.
I have had strong representations locally and nationally from building contructors who argue that the Government's proposal to levy VAT on building alterations will simply increase the black economy and put more construction workers, particularly in small firms, on the dole.
The imposition of VAT on takeaway food is especially mean. Parents in my constituency have told me that because of the cuts in the school meals service their children have only one hot meal a day, and it is a takeaway meal. Those kids will be penalised.
The Government's attempt to redress the anomaly on furnished holiday lets will compound some of the problems of those with self-catering units. Further changes will need to be made in Committee.
I accept that there are constraints imposed by the Committee stage procedure for the Finance Bill, but we shall be looking for a redress of the anomalies in the schedule B and schedule D taxation of forest land.
We shall also require much convincing that the changes proposed in life assurance matters are justified. There is consternation in the life offices in places such as Edinburgh, because their 37·5 per cent. special rate for corporation tax is the basis on which all their actuarial calculations have been made and if that rate is changed, the actuarial calculations for generations will go out the window. The life offices are worried about that and about the possibility that the Government will claw back premium relief on policies that have in-built changes, as opposed to those with discretionary elements written in.
We shall require a good deal of convincing that the tax clawback from those who work overseas is justified. It is a mean action against hard-working people who serve this country well, selling our goods abroad. I shall require much convincing that the abuses that the Government claim to have unearthed justify that change.
One of the most distressing aspects of the Budget is that the Chancellor discriminated implicitly against the elderly. It is unfair that he should have increased the tax allowances for single and married people by 12 per cent., but increased the age allowance by only an indexed 5·5 per cent. Age allowance has been about one third higher than the basic personal allowances, but in 1984–85 the difference will be reduced to about 25 per cent. Mr. David Hobman, the director of Age Concern, was quoted recently in The Times as saying:
The Chancellor has done nothing at all in real terms for pensioners. Something should have been done to protect the incomes of those who have worked and saved to provide a little for themselves in retirement.
If the Chancellor used the £450 million that he will lose from the reduction of stamp duty, he could increase pensions by 9 per cent. instead of by only 5·5 per cent. There is a widespread feeling that it is about time that the Government got round to abolishing the earnings rule for pensioners who earn more than £65 a week. That would cost £190 million. If that is too much, they could redress the anomaly which applies to the 225,000 retired women aged between 60 and 65 which would cost only £20 million. There is a glaring and indefensible omission of help for the elderly in the Budget.
The Chancellor's claims about how the poverty trap will be affected by the Budget have been proven false. The gilt has quickly been stripped off the gingerbread. The Low Pay Unit and others have shown clearly that, under the previous Chancellor, now the Foreign Secretary, the tax burden on the low-paid increased sharply, with the result that the number of families in the poverty trap more than doubled. The changes to personal allowances do nothing to begin to scrape the surface of that problem. Child benefit requires an increase of £1 a week in November rather than the 35p that we expect the Government to announce this May.
The tax threshold remains well below the accepted standard of poverty and will have only a slight impact on the poverty trap. In the absence of fundamental structural reforms of personal tax allowances, the increase in thresholds will be worth much more to the better-off. By "the better-off' I mean top earners with salaries of £50,000 who are to receive a tax cut of £600 a year, which is almost six times as much as will be received by the equivalent married couple on an average or low income. Only people with incomes above £18,000 a year, or £345 a week, will pay less in income tax and national insurance as a proportion of earnings as a result of Conservative government. That is an indictment of the Budget. That argument has been reinforced by a report of the Institute of Fiscal Studies which shows that the Chancellor's claims for his changes are wholly phoney.
We would have liked something to be done to stimulate private investment through share ownership schemes. That opportunity was missed and the Chancellor's scheme does not go anything like far enough. I recommend that he studies the details of the Monory scheme in France which are set out in the Investors Chronicle of 2 March and to which my hon. Friend the Member for Colne Valley (Mr. Wainwright) has drawn the Treasury's attention. That scheme would require the removal of stamp duty on share transfers and would offer tax incentives to make investment in shares as attractive as other forms of saving such as life assurance. The Monory scheme is well


developed and could quite easily be adopted. That is a positive approach which my party has always supported. Again, the Chancellor has missed that opportunity.
The Government have sent up a smoke screen which has produced a false euphoric response in the financial sectors that are to be found within a 10-mile radius of London. If the Chancellor cares to struggle further north outside that radius, he will find that the view taken of the Budget is quite different. In the fullnes of time, I think that the canny assessment that has been made in the northern reaches of the country will prove to be right. We should have had a Budget that introduced a tax credit system, and was far more re-distributive in its effect, and it should have contained an accessions tax. All those opportunities were available to the Government.
We will oppose the Bill. It fails to re-distribute wealth, to encourage public investment, to encourage share ownership and to do anything for unemployment.

Mr. Christopher Hawkins: I shall be brief, as I agreed, because I know that many hon. Members wish to speak, and the average length of speech has been rather long, thus depriving many hon. Members of the chance to speak.

Mr. Maxton: Is the hon. Gentleman aware that there is no time limit on the debate so that there is no reason why hon. Members should limit their speeches in any way?

Mr. Hawkins: I am aware that some hon. Members are under the illusion that there is no time limit. I am also aware that it is possible for the debate to be closured.
I welcome my right hon. Friend's concession in the Budget to the disabled. Unfortunately, some press reports, notably "Moneywise" in the Daily Mail, reported that customs and excise were interpreting the concession in a way much stricter than the impression given in the Budget speech. It was being interpreted far more strictly than the Chancellor intended. That would not be the first time that the interpretation of a measure that has passed through Parliament was stricter than Parliament intended.
Many hon. Members who are concerned about this matter tabled early-day motion 639, which has been signed by members of all parties. It welcomed what my right hon. Friend had announced for the disabled, and called on him to ensure that the concession was implemented as he intended, and as he had stated in the Budget. The motion said:
That this House, having welcomed the Chancellor's statement that 'neither car tax nor value-added tax will apply to family cars designed for disabled people or substantially adapted for their use', notes with concern reports"—
that is, the press reports in the Daily Mail and other papers—
that Her Majesty's Customs and Excise propose to restrict the application of this exemption to vehicles that can accommodate a stretcher or a wheelchair and no more than five other people; and calls on the Chancellor to ensure that his Budget statement is implemented.
That motion was signed by at least 40 hon. Members to my knowledge in the handwritten version. Unfortunately, somewhere in the Table Office, or at the printers, the wording of the motion changed. For that reason, I have withdrawn the motion, and I have asked for the right to speak to explain why I have done so.
I withdrew the motion because the wording was changed to give a quotation from the Chancellor

suggesting that the Chancellor had said that neither VAT nor car tax would apply to cars registered for the disabled, whereas in fact the Chancellor said, "designed for the disabled" which the original handwritten version of the motion correctly stated. Unfortunately, some hon. Members may have signed the motion and been misled by the printed version, which is incorrect. I have therefore withdrawn it. The withdrawal of the motion does nor. in any way mean that the hon. Members who signed it do not agree with the motion as originally written. However, the printing error has led to confusion inside and outside the House. Those hon. Members who signed the motion still warmly welcome what the Chancellor has done, and are glad to learn that the concession that he gave in the Budget speech will be implemented exactly as he intended.
If there is a winding-up speech tonight, I invite my hon. Friend the Financial Secretary to the Treasury to elaborate on the concession, and to make it crystal clear to the press and public just what it amounts to. From the many signatures on early-day motion 369, my hon. Friend the Financial Secretary will know just how strongly hon. Members on both sides of the House support specific measures to help the disabled. We welcome what has been done. It may be relatively small, but it is a help, and it is welcome. I hope that my right hon. Friend the Chancellor will continue to search for further measures to help the disabled in his future Budgets.
I should like to make a brief personal point, which in no way involves others who have signed that early-day motion. I hope that my right hon. Friend the Chancellor will consider what concessions could be given to those who are seriously disabled but who can, with great difficulty and sometimes with a stick or other aid, walk a short distance, and who do not need a car that is specially adapted for a wheelchair or stretcher, and so do not benefit from the concession. I realise the difficulties. At the moment the concession relates to the vehicle rather than the person, and all sorts of administrative, technical problems are involved. However, I hope that my right hon. Friend the Chancellor and my hon. Friend the Financial Secretary—who may or may not be summing up—will consider that category of disabled people, who need a car in order to be mobile, but who do not gain from the concession.

Mr. Brian Sedgemore: I am one of those members of the Treasury and Civil Service Committee who considered the Budget. I think that it is the first time for several decades that that Select Committee's report has not been unanimous. I was unable to sign the report for the simple reason that the Budget is predicated on monetarist nonsense, and the report is also predicated on that nonsense. Paragraphs 13 to 18 of the draft that we considered were economic mumbo-jumbo, and in the published draft those same paragraphs— numbered 15 to 20—were also mumbo-jumbo. It is a matter of regret that the Select Committee was unable to accept an amendment proposing that those paragraphs should be deleted, which was supported by my hon. Friend the Member for Great Grimsby (Mr. Mitchell) and I. The amendment regretted the fact that the Chancellor completely misunderstood monetarist theory, and did not understand its painful consequences for our nation. The amendment went on to say that in the


Chancellor's use of MO, M1, M2, PSL2, M3, narrow money, broad money, and narrow money redefined, he was reducing economics to a fantasy world.
We regretted the fact that the Chancellor did not accept the views of the Bank of England panel, which met on 28 October 1983. Some of the most eminent economists in Britain were present, together with the Chancellor's chief economic adviser, Sir Terence Burns. At that panel, it was conclusively shown, in a torrid attack on monetarism such as has rarely been seen in the academic world, that there was no empirical evidence to support monetarist theory or practice.
When we questioned the Chancellor, he could only sneer at the work of Professor Arthur Brown of Leeds university and at the brilliant analysis made by Professor David Hendry and Mr. Erickson from Nuffield college, which showed that the whole basis of monetarist theory was nonsense. It is not good enough for the Chancellor to go to a Select Committee and to view some of the most brilliant minds in our country and in our time with disdain and contempt instead of producing rational arguments. If he listened occasionally we could be better governed.

Mr. Christopher Hawkins: Economists in different camps throughout the world have argued about the effectiveness of monetarism in the short term and the effects that it will have on the economy. Few economists disagree that in the long run the basic tenets of monetarism can be upheld. The hon. Gentleman's arguments are mainly about short-term effects, but in the long term the link between money supply and prices is not disputed, even by most established Keynesians.

Mr. Sedgemore: With respect to the hon. Gentleman, who has intervened several times tonight, I do not think that he understands what he is talking about. I shall not dodge the issue. I do not intend to abuse the hon. Gentleman, but I intend—[Interruption.] I can stand here all night. There is no closure. I intend to deal in detail with the monetarist argument because it is central to the Bill.
Both the Chancellor and the Chief Secretary have said in recent months that they want to secure the best use of resources. They want efficiency, enterprise and competition. Let us assume that that is the right prescription for our economy. According to classical economic theory we shall not have the best use of resources, we shall not have efficiency, enterprise or competition if business is run by cartels and monopolies.
Normally the control of cartels and monopolies is exercised through the restrictive trade practices Acts. I submit that one can impose fiscal measures to encourage competition, and I shall table amendments to that effect if I am chosen to serve on the Committee. I shall propose a competition tax to encourage competition.
I shall describe the mischief which I shall try to cure through a competition tax. The matter arises from the way in which civil engineering companies compete, or do not compete, for contracts at home and abroad, and in particular from my considerable investigations into the way in which Cementation International has competed for a contract in Oman.
I shall first set out the procedure for the civil engineering industry involved in large contracts overseas. I have done a lot of work on the subject. I was in the Civil

Service and I have checked my facts with former Secretaries of State for Trade and Industry. I shall be able to describe what the present Minister for Information Technology said. He blew the gaff on television.
Normally we do not achieve the best use of resources, efficiency or competition, but a cartel meets civil servants at the Department of Trade and Industry. It is not called a cartel, of course. It is just a group of individuals from the construction industry. They go to the Department, which hopes that they will decide on only one firm bidding for a large overseas contract. That helps the ambassadors in foreign countries, who have told me privately that they prefer only one company to bid because they can speak to the relevant Government Minister and wind him up.
If two companies compete, it is difficult for ambassadors to wind up the Minister, to tell him what to do, who to contact and what they want. If, when the cartel meets civil servants from the Department, it does not decide that only one firm will bid, the construction industry has an export group which acts as an inner cartel. It meets privately to try to decide that only one company should bid. If that fails, there is a further inner cartel that tries to give the contract to one firm.
What has caused concern about the Oman contract, which is why we need a competition tax, is that the cartel did not operate. Because of the way in which the Prime Minister responded to the contract, and because she met her son in Oman, the cartel was broken. That cartel was turned into a monopoly, whose beneficiary was Cementation International. It gained the contract without going through the cartel procedure.
I am not putting forward a speculative view; it comes from the heart of the Conservative party—construction companies willing to talk about it privately but not in public because they do not want the cartel arrangement to be made public, as I am doing now. They are complaining bitterly that it is all very well for Trafalgar House, Mr. Nigel Broackes and Lord Matthews to buy a knighthood or two, but it is different to buy a £300 million political favour.
I do not know whether that is a justified allegation, but that is what the companies complain about — [Interruption.] Someone says, "Shame". The civil engineering industry of this country is putting that forward. I am not so naive as to reveal my sources in the debate. Before this story is finished, all the facts will come out publicly.
The Minister for Information Technology has blown the gaff himself. He appeared on television when answers in the House were rather different from current answers. What he said justifies the need for a competition tax. He said:
I will only say that the actual contract in question"—
he was talking about the Oman contract—
there was a single tender or a tender for a British company as it were. Now that is not at all unusual, in fact and in fact, in certain areas we try to ensure that only one British group tenders".
Two British groups do not compete for the same business overseas when they have to fight against the Japanese or the French or the Italians or the Germans.
I do not know whether hon. Members realise the awesome significance of what I have said. The Minister is saying that British firms break the laws of the EEC when they compete overseas. Mr. Raymond Blackburn wrote to


the Minister with responsibility for the Civil Service— who was present in the Chamber until quite recently—and complained about that. The Minister replied:
Thank you very much for your letter of 21st February about comments made by Kenneth Baker in a recent television programme. Incidentally, he is Minister for Industry and Information Technology. Paul Channon is Minister for Trade. I find it difficult to believe that Kenneth Baker, who is a most experienced Minister, would announce some new policy in the way you describe".
But that is precisely what he announced in the transcript from which I have quoted. Mr. Raymond Blackburn replied to the Minister. In a letter dated 8 March 1984 he said:
I knew the facts in the first paragraph of your letter particularly as Chips Channon and I were friends, and I met Paul both at 5 Belgrave Square and at Kelvedon. He was a schoolboy, but I have naturally followed his career. Mr. Baker was treated as an important Trade Minister and fits that description.
The letter continues:
The wider implications are immeasurably more serious. If the 'certain areas' include EEC countries the policy is in breach of Article"—
I think that there is a reference to article 85—
of the Treaty of Rome. May I please be assured that the policy excludes EEC countries?
You will remember, Mr. Deputy Speaker, that EEC countries were included. The letter adds:
If not I shall with regret consider taking legal action for a declaration.
Apparently, the Minister did not reply.
Where there are firms which sign overseas contracts in excess of £100 million, they should get a declaration from the person with whom they are signing the contract that states that there have been tenders, or a declaration saying why it was impossible to tender. This would be my competition policy. The Treasury, or the Department of Trade and Industry, would formulate rules setting out certain exceptions which might be allowed in certain circumstances. If the exceptions were not met and there had been no tendering, and if there were allegations of massive political favours or other allegations, a 5 per cent. competition tax would be charged. That would produce revenue of about £15 million in the Cementation case. Given the knowledge that I have of the contract, including the information that the bribes involved only £8 million, that would be an inducement for Cementation not to have entered into such a contract without proper tendering.
I want to discuss more generally the background to the Budget. I believe that the Finance Bill is fundamentally misconceived. I do not think that the Chancellor of the Exchequer has asked the right questions and therefore he cannot give us the right answers. He has ignored the fact that we have witnessed over the past decade the breakdown of the international monetary system. There are three basic ingredients of the breakdown which have led to this fundamentally useless Bill.
The first ingredient is that the nations of the Western world adopted the wrong response to the oil crisis of 1973. In a fit of desperation they deflated, and that was wrong. My second premise, which will be slightly more contentious, is that floating exchange rates and free trade no longer allow the countries of the Western world to return towards full employment. That has become institutionalised in the rules of GATT — the general agreement on tariffs and trade—and in the rules of the European Economic Community.
We are told that we are all Europeans now and psephologically that might be right, although volatile

opinion polls seems to suggest differently. On occasions the Prime Minister seems to be more anti-European than I am.
Even if we stay in Europe, no illusory approach to economics will remove the fact that, in the end, Britain must plan its trade and match its imports with its experts. Whether we do or do not reach an agreement within the rules, the balance of payments problem, if there is to be sustained economic growth, will not go away.
My third point is more complicated. We have witnessed during the last decade the growth of monetarism, which predicates this Finance Bill and the whole of Conservative thinking since 1979. There are many versions of monetarism, and we should not try to score cheap political points over them.
The first definition of monetarism is the old Fisher eqation, which most people know, that MV =PT, whereby M is defined as the amount of money, V as the velocity of the circulation of money, P as the price level and T as the number of transactions. If that were monetarism, I would say that we were all monetarists now because that is a definition, an equation, and the equation cannot be wrong because the terms are defined in such a way that one side must equal the other.
The problem comes if one takes it a little further and seeks to argue that money GDP, which PT, is caused by the amount of money in the economy. Difficulty arises when one switches V from one side of the equation to the other, so that M=PT/V. The monetarists go on to argue that it is really M=PT, as one can ignore V because it is either stable or predictable. When I questioned the Chancellor on this very point during the proceedings of the Treasury Select Committee and asked him whether it was stable or predictable, he replied that one could predict trend velocity. However—I invite hon. Members to interrupt me if I am wrong—I have seen no evidence that V is predictable or that one can reliably predict trend velocity, and certainly there is no evidence that it is stable.
I am a modest man and I hesitate to quote myself, but if one really wants to know whether V is stable or predictable one would do well to peruse a booklet written by me entitled, "The How and Why of Socialism" The relevant short paragraph—I doubt whether there will be any conflict about this, because it is a statistical analysis run through the Cambridge computer on my behalf— says:
The notion that V (the velocity of the circulation of money) is constant—or even approximately constant—can readily be shown to be false. Since 1965, for example, the income velocity of circulation (the money value of GDP divided by the sterling money stock [M3]) has fluctuated from a high of 3·3 in 1970 to a low of 2·6 in 1973—a difference of 25 per cent. In other words, the prediction of GDP from knowledge of the money supply alone is subject to that degree of error. Equally action taken by the authorities to expand or contract the money supply has an unprecise effect on GDP, let alone on price inflation, unless V can be forecast with some accuracy. Thus, for example, the expansion of money supply by 25 per cent. in 1972 and 24 per cent. in 1973 was offset by a big fall in V in both years, while the relatively small increases in M3 in 1975 and 1976 were associated with relatively large increases in V".
I have set out a table that demonstrates that point. I shall quote just one more sentence, as I know that you, Mr. Deputy Speaker, are not keen on long quotations. My booklet states:
This suggests that there is some tendency for fluctuations in V to be the agent which enables the money supply to


accommodate a given growth in GDP, the latter being determined by factors other than the Government's policy towards M3.

Mr. Alan Howarth: Will the hon. Gentleman kindly turn to the page in his interesting treatise in which he disposes of the argument advanced by Phelps, Brown and Hopkins in 1956 that 95·9 per cent. of the price rises in southern England between 1281 and 1981 occurred in the period following 1936 when Keynes published his general theory?

Mr. Sedgemore: I think that the hon. Gentleman should read my article on 4 May 1974 in Tribune which dealt with all the years when we had a gold standard and the relationship between stable money and a stable gold supply. My article showed up all the problems that arose. In discussing the value of monetarism, one can talk about its effect on inflation and on unemployment. That is critical to the Chancellor's Budget strategy. I shall return to the argument advanced by Professor Brown, Hendry and Erickson.
It has been said that monetarism implies that M3 causes inflation. The problem is that, unless the banks can charge different interest rates from those charged by other institutions, it is theoretically and practically impossible for M3 to cause inflation. It has been said also that the public sector borrowing requirement causes inflation or causes M3. That is a theoretical impossibility unless there are differenial interest rates.
Mr. Peter Jay, who used to write for The Times, said that inflation was caused by public sector expenditure, but that is nonsense and he was forced to retract that statement. The former editor of The Times, Sir William Rees-Mogg, said that there was something inherent in the scriptures of both Judaism and Christianity which suggested that countries needed stable money and that that could be achieved only through the gold standard. That was the reason why I wrote my article, which corrects the misapprehension of the hon. Member for Stratford-on-Avon (Mr. Howarth).
We do not need to go back to those ancient authorities and to people such as Mr. Peter Jay and Sir William Rees-Mogg, who might be considered as excessive Socialist sympathisers of yesteryear, to support our attack on the Chancellor's broad economic strategy in the Budget. We can examine "Origins of the Monetarist fallacy—The Legacy of Gold" by Roger Bootle. He is the chief economist of Capel-Cure Myers and not a radical Socialist. He said that the problem faced by the Chancellor and the House started in 1956 with a statement by Professor Milton Friedman, who said:
there is perhaps no other empirical relation in economics that has been observed to recur so uniformly under so wide a variety of circumstances as the relation between substantial changes over short periods in the stock of money and in prices; the one is invariably linked with the other and is in the same direction; this uniformity is, I suspect, of the same order as many of the uniformities that form the basis of the physical sciences.
There has been a great deal of statistical analysis since then. It shows that that statement is not just empirically false but it bears no relationship that has been observed to the physical science. It was a seminal statement that hit the Western world as much as Keynes's general theory and far more than anything that Karl Marx had said years before.
That seminal statement was quickly taken up by the academic world. It succumbed; and shortly after the

media, political parties, officials who worked for the Government, and then Governments, succumbed. Then came the 1973 oil crisis and terrified bankers, officials and Governments around the world stretched out for something on which to hang. The only thing that appeared to be present was monetarism. That is where we come to the sedentary intervention of the hon. Member for Stratford-on-Avon who correctly said that I had the date wrong. Of course, I had. In 1975, the then Labour Government started to produce the first of the monetarist Budgets. The important point about the analysis—I again questioned the Chancellor about it in the Select Committee on the Treasury and Civil Service — is that Roger Bootle observes that
no one is able satisfactorily to define the concept of 'the money supply' in theory, let alone identify it in practice.
Indeed, the basic concept of the money supply is meaningless.
Roger Bootle says that the problem comes from the fact that we have confused commodity money with credit money. Of course, the gold standard provided commodity money. Commodity money is liquid. In his document, which was presented at a lecture recently because it was thought to be important in relation to the impending Budget, he said:
(a) it represents immediately available purchasing power; ….(b) it carries no credit risk; (c) it pays no interest; (d) together, these characteristics make it capital certain.
Credit money is not the same kind of money. It is nonsense to start arguing on the basis of commodity money and credit money. He said that credit money may be illiquid.
(a) bank money may not represent readily available purchasing power … (b) it carries a credit risk (the risk of bank default); (c) it may pay interest; (d) because of the above, it may be capital-uncertain (as with certificates of deposit).
Roger Bootle goes on to argue from that, and I agree with him, that we should pay less attention to the monetary aggregates and more to price variables—the exchange rate, rates of interest and the structure of rates of interest.
I should argue—I believe it is one of the answers to the question that the hon. Member for Stratford-on-Avon raised — that over the long term, if one studies the relationship between the money supply and inflation, one finds that they can be stuck on graphs and be shown to be going in the same direction but they tell us nothing about cause and effect.
The fundamental problem that Professor Friedman has faced — even if his statistics were right, and in a moment I shall show that they were not—is that he never proved the cause and effect. That has bedevilled the argument for a long time.
If there are those who are wont to believe in the arithmetic of monetarism and the arithmetic that the Government have used, I would refer them to the document, "The Failure of Monetarism" by Christopher Johnson. He is not exactly a radical Socialist; he is the group economic adviser of Lloyds Bank. This document is dated December 1982. Christopher Johnson, who is, I believe, one of the advisers to the Treasury and Civil Committee, in one of his more important paragraphs writes—
enormous double figure rises in sterling M3 in the last four years, "—
given the date of the document, that was the period from 1978 to 1982—
followed by a dramatic fall in the inflation rate, should be enough to disprove the simple St. Louis model once and for all.


I hope that the Financial Secretary to the Treasury, when he replies, will accept that we have disproved the St. Louis model once and for all or, if he believes that we have not disproved it, will say on what basis the model can still stand.
Christopher Johnson goes on to say:
Failure in controlling money has been rewarded by success in bringing down inflation, and it seems unlikely that the two are connected. If anyone is tempted by this to switch the horse he is backing to monetary base or sterling M1, he should be reminded of how the rapid growth of these narrow aggregates in 1975–77"—
something I referred to in my document—
was also followed by a dramatic fall in the inflation rate in 1978.
He sets out the evidence in a table at the end.

Mr. Nigel Forman: I have been listening carefully to the hon. Gentleman. If he is so against the theory of monetarism and if he made this clear as early as 1974, as he said earlier, how was it that he remained a parlimentary private secretary in the Labour Government for all those years and did not resign?

Mr. Sedgemore: There is a truthful answer and a bogus answer. The truthful answer, as the hon. Member knows, is that politics is a series of messy compromises. The other answer is that there was some advantage in being inside the system and getting the kind of information which one could subsequently leak, which ultimately led to my being sacked by the then Prime Minister. I hope that that satisfies the hon. Member. That is as plain as I can put it.
The more interesting statement by Christopher Johnson, group economic adviser to Lloyds Bank — again it is something I put to the Chancellor when we were questioning him although one would not think so when one reads the Treasury report— is that there has been an enormous price to pay for monetarism. By inference I think we are entitled to say that there will continue to be an enormous price to be paid for monetarism. Basically the price that has to be paid is lost output, lost income and high unemployment. He put it very succinctly, and I shall quote just this short paragraph:
Monetary policy has not achieved its targets for the growth of the money stock, but it has, by means of high interest rates, led to recession, and thus to a lower demand for labour, of which rising unemployment is the main indicator. Each one percentage point increase in unemployment has led to about two percentage points off wage inflation, which has in its turn slowed down price inflation. This corresponded"—
this is the critical point—
to a sacrifice of about 2 per cent. in GDP in 1980, and again in 1981.
If we pause to reflect on that, we see that it is an astonishing sacrifice that the whole nation should on average be 4 per cent. worse off simply because the Chancellor is obsessed with a series of monetary and financial targets which have no logical base.
The hon. Member for Carshalton and Wallington (Mr. Forman) has encouraged me to quote from the last torrid attack on monetarism that came in October when a Bank of England panel met to discuss two very important papers which the House would be unwise to ignore. There is a list of economists which I shall not take up the time of the House to read out; it is an important group of economists. At the beginning one of the participants tried to define monetarism in language which everyone could understand by saying:

Money causes prices. Money does not cause output. Nothing else causes prices or output.
There then follows a fairly orthodox economic paper by Professor Arthur Brown, using fairly orthodox economic techniques. He was examining the book by Friedman and Schwartz on monetary trends in the United Kingdom— the work on which the whole theory is based. At the end of his argument, Professor Brown asked one question: do Friedman and Schwartz make their case that United Kingdom experience supports a simple quantity theory, with money supply controlling prices and output controlled by other factors entirely? He answered it thus: "In a word, no".
Then we have the paper of Professor David Hendry and Mr. Erickson of Nuffield College. Theirs is a paper which uses entirely different and highly sophisticated economic techniques. It says that, in effect, Professor Friedman actually cooked the books. One of the basic ways in which he did that was by averaging out the data, and in doing so he distorted it. The same evidence that Professor Friedman has used to support his theories can be used to discredit them. Professor Hendry concluded with perhaps one of the most modest remarkable statements ever made by academics, who are very loth to use anything other than the most language. He said:
We actually believe that there is a need to take the 'con' out of economics.
What we have witnessed over the past decade, and what has made our country so poor, is an academic con trick. The bulk of the rest of the world has given up that academic con trick, but somehow the monetarist experiment still continues in Britain, although it is here that the evidence is strongest in disproving that experiment.
I said that there were three factors in the breakdown of the international monetary system: the response to the oil crisis in 1973; the floating exchange rates and free trade no longer enabling the countries of the Western world to return towards full employment; and the acceptance of monetarist doctrine in our society. But we have to add to those three factors three others which are still present and which have contributed to the long-term economic decline of our country, which the Chancellor and the Government refuse to recognise.
First, we lost an empire and we lost privileged markets.
Secondly, until very recently we have conducted our economy in a way which favours commercial and City enterprises rather than industrial enterprises. Until very recently we have always had to sustain interest rates which have been above those in many other countries, in order to attract hot money to Britain.
Thirdly, there has been the persistent failure—it still persists—of governments and trade unions to respond to the way in which capital can be moved about the world by transnational companies. I have tried to avoid jargon in my speech, but the effect is that capital basically dominates labour rather than capital working for labour.
Fourthly, our country suffers—and I see nothing in the Budget or the Finance Bill to deal with the matter— from the industrial consequences of our being a manufacturing nation which despises its manufacturing base. I have always thought that there were two reflections of that; indeed, I am a victim of one of them myself. The first is that people who go to Oxford and Cambridge, instead of getting out and working as plant managers in


industry, tend to go into the Civil Service. That has distorted the kind of value that we have got out of our university system.
That is mirrored exactly at another level. When I was Member of Parliament for Luton, West, young people were always encouraged to enter local government or to become bank clerks rather than to become fitters in industry. I do not know why; there cannot conceivably be the same job satisfaction in being a bank or insurance clerk as there is in being a fitter in industry. Those parallel measures have damaged our economy. If we add the three basic reasons for the breakdown of the international monetary system and those four basic reasons for long-term decline—each hon. Member can add others—to what has happened in the post-war years, we can begin to see the problem that must be solved. Until we see it, we cannot get a Finance Bill to solve it.
Since the war, the booms have become smaller, and the slumps deeper, and each time we have started from a base of much higher unemployment. Each time we start from that higher base it will more difficult to get out of each succeeding slump. Manufacturing industry especially has taken a series of ferocious knocks. Since 1979 the decline has been awesome; indeed, from 1979 to 1981 the decline in manufacturing output, employment and investment was greater than the decline between 1929 and 1931.
The Financial Times recently reported the Chancellor as saying that everything would be all right. Although some people were saying that when the oil ran out, we could not sustain our growth, and that, because we would get into balance of payments problems if we tried to achieve economic growth, there would be 5 million or 6 million unemployed, instead of 3 million or 4 million, the Chancellor said that that was wrong. He said that our large overseas investments would make up for the losses in oil revenue. But no one in his right mind who has studied the proportions of profits remitted to the United Kingdom can believe that, in the 1990s, those remittances will make up for the phenomenal loss of oil revenues. We must sustain a manufacturing base, because the bulk of our exports is in finished manufactured goods, although for the first time in 1983 we became net importers of finished manufactured goods. We must sustain exports in order to pay for our imported food and raw materials.
What sort of Finance Bill should we have had? First, we should have had a Budget, a Finance Bill and a balance of revenue and expenditure that involved the injection of more money into the economy. To use the Prime Minister's crude shopkeeping terms, we should have borrowed more. The Prime Minister believes that borrowing is an original sin; she says that it is wrong to earn a pound but to spend a pound and a penny. That sounds good on television, and it may be the way to run a shop in Grantham——

Mr. Allan Roberts: Is that not one thing which the Prime Minister has in common with the Militant Tendency, which is also opposed to borrowing?

Mr. Sedgemore: I am sure that the Prime Minister has much in common with the Militant Tendency, but since I am much more delicate than is my hon. Friend the Member for Bootle (Mr. Roberts) I shall not refer to it.
Of all the people on the earth, who is the Prime Minister of the United Kingdom since 1979 to lecture us on

borrowing? During the four years after 1979, according to figures supplied in Hansard, the Government borrowed just over £40 billion. No other Government in peace time has borrowed so much money in a four-year period. It is rather like an alcoholic lecturing a teetotaller on the virtues of abstinence.
At the general election the Prime Minister constantly told the public that if only we behaved in a fiscally wise fashion and borrowed less we could be as prosperous as the more advanced countries of the Western world. That is a very odd statement for the present Prime Minister to make.

Mr. Doug Hoyle: Does my hon. Friend agree that it is very bad business even for a small shopkeeper or someone with the mind of one to use North sea oil revenues, which should be used for the future success of the economy, to pay unemployment benefit? Is that not a waste?

Mr. Sedgemore: My hon. Friend is absolutely right. Indeed, way back in 1977, my right hon. Friend the Member for Chesterfield (Mr. Benn), then Secretary of State for Energy, proposed the setting up of a separate North sea oil fund to help investment in manufacturing industry, the development of public services and the infrastructure of the public sector. The notion was cleared by the Public Expenditure Survey Committee and by the Public Accounts Committee as involving no technical difficulties, but it was slated in the press and disliked by the then Prime Minister and Chancellor of the Exchequer. When the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), who went to Europe, made exactly the same proposal five years later, everyone hailed it as the most brilliant proposal ever. One just cannot win in these arguments.
If one ignores the public sector borrowing requirement and compares the Government deficits of the various Western countries one can see how much each nation borrows. If I understand the Prime Minister aright—if I am wrong, no doubt I shall be corrected—the deficits of the various Western countries for 1982, as a percentage of nominal GDP, were 2 per cent. for Great Britain, 4·1 per cent. for Germany, 3·7 per cent. for the United States, 3·3 per cent. for Japan and 2·9 per cent. for France. Astonishing though it may seem, therefore, all those countries are doing exactly what the Prime Minister told the electorate it was utterly irresponsible for the Labour party to propose for this country. When the Government wind up the debate—tomorrow morning, the day after, or whenever — I hope that we shall be given an explanation of that dilemma as it worries all Opposition Members and a number of Conservative Members. Indeed, various Conservative Members have expressed concern in the House on previous occasions, including the right hon. Member for Old Bexley and Sidcup (Mr. Heath) and other right hon. Members below the Gangway.
The second suggestion that was pooh-poohed by the Conservatives when it was made by my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) is that there should be a modest depreciation of the pound to make our exports more competitive. I am never sure — perhaps the Minister will intervene and tell me—whether the Government have an exchange rate policy. To judge from answers given to the Select Committee by Treasury officials, there is an upper and a lower limit, the


one concerned with recession and the other with inflation. That suggests that the idea of an exchange rate policy rather than a completely free market attitude is accepted by Treasury officials and even, in extremis, by the Government.
The more difficult and contentious point is about trade planning. No country can permanently import more than it exports unless it has infinite reserves, and as no country does, no country can. Therefore, we need various forms of trade planning such as import substitution, and, I submit, straightforward import duties or tariffs. Call it protectionism if one likes. It has been said that that policy is not viable because there would be retaliation, but those who argue that must look at the structure of the goods that we are likely to import and export and the countries and the balance of the deficits between those countries, and say how the surplus countries could win a trade war if, indeed, such a war—I would regret it—were to take place.
We should not be heading towards trade wars. The international monetary system has broken down and we need to look both to the advanced countries of the western world and to the Third-world countries for some new form of Bretton Woods agreement, to use the old jargon. We need a completely different mechanism for controlling the relationship between states. It is simple to conceive of simple models, but it is more difficult to get Governments to agree to them. It is perfectly feasible to conceive of dividing the world into surplus countries, advanced surplus countries, into countries such as Britain which, if they went for sustained economic growth would have deficits, and into Third-world countries. Each block could impose import controls or plan its trade, first, in so far as it is moving towards full employment—if it gets there it cannot do it any more—and, secondly, in so far as it does not damage the block below it.
Eventually one gets a system that is mathematically possible. For any level of demand there is a restriction of trade, but overall there is more trade. If only Conservative Members and the Chancellor could grasp that simple mathematical model and then go to our European partners and to other countries and start to work out new criteria for the western world to achieve economic growth and — I do not want to go into this — new relationships between the advanced countries of the western world and the Third world, we might eventually see some more economic growth — [Interruption.] An hon. Member might think that it is drivel but I hope that he will have the opportunity——

Mr. Stuart Holland: I am sure that the House is touched by my hon. Friend's restraint in not wishing to go into the subject of developed and less developed countries. Despite various comments, does he agree that it is striking that if developed countries— members of the OECD—were to give 0·7 per cent. GDP in aid, it has been estimated that that would create 2 million jobs in the OECD countries?

Mr. Deputy Speaker (Mr. Paul Dean): Order. I hope that the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) will resist the temptation to stray. We are dealing with the Finance Bill, which deals with taxation.

Mr. Sedgemore: I hope, Mr. Deputy Speaker, that you will let me sneak in the one comment that no one is better qualified to make that comment than my hon. Friend the

Member for Vauxhall (Mr. Holland) and that when he sits on the Government Front Bench the world will be a much better place.
The Chief Secretary to the Treasury in opening the debate today said that public expenditure would be curtailed. That relates to the fiscal stance which is set out in table 2·2 of the Financial Statement and Budget Report 1984–85. I am sure that you will have read it, like the rest of us, Mr. Deputy Speaker. It is an extraordinarily restrictive fiscal stance. It has a PSBR of £10 billion for 1983–84—the financial year that has just passed—and of £7 billion for each subsequent year up to 1988–89. One of my hon. Friends may well care to comment on that strange obeisance to the figure of £7 billion year after year. It is a slowly tightening fiscal stance. If that fiscal stance is combined with the savagely diminishing ranges of monetary targets set out in table 2·2 of the Financial Statement, which defines narrow money, which is MO, and broad money, which is M3 — narrow money is supposed to control interest rates and broad money is supposed to control the PSBR—one sees a genuine monetarist policy. I am surprised to hear people saying that they do not believe that the Chancellor is still a monetarist.
One of the justifications that the right hon. Gentleman claims for his monetarist stance—this came up when he was questioned by the Select Committee — is that it conditions expectations, as, apparently, does M3. I ask the House to consider what that means. If it means anything, it is that M3 conditions wage demands.
I went into Marks and Spencer's and Sainsbury's in Hackney this morning and spoke to some of the shop assistants and customers to test that theory. None of them talked about M3. I visited a group of co-operatives later and, again, no one there seemed to be terrified by M3. It is like an horrific nightmare, yet it is the basis of the economy and the basis on which the Chancellor is asking wage earners to allow his package to be successful. It is claimed that if wages are excessive, the whole package will fall apart.
It is like a nightmare version of "The Rag Trade". If a shop steward in the rag trade—in Hackney, it would be a woman— says to the employer, "We want a 9 per cent. wage rise," the employer will say, "Nine per cent? But surely you have read the seasonally and provisionally adjusted monthly figure for M3 in the Bank of England Quarterly Bulletin." The shop steward will ask, "What is it?" and when the employer says, "It is 0·6345," she will say, "It can't be! If it is 0·6345, we are over the target range for the year."
Is that the new monetarism? Is this the most advanced and sophisticated monetarist theory?

Mr. Dennis Skinner: Is it not likely that when that idea was put to the shop steward, she said, "Never mind about that. What I want is the same as what that Selwyn Gummer got — £5,000 extra for doing nowt."?

Mr. Sedgemore: That seems to be a valid economic point. It is far more likely that that sort of relationship will strike a chord with working people than would looking at M3 as a condition of their expectations. The Chancellor had the temerity to sit in a Committee Room and inform some of the wisest hon. Members—I exclude myself— that that is what economics is all about.
The Chief Secretary mentioned cuts in public expenditure. One area where we can seek to encourage public expenditure is local government. The Treasury argues that local government expenditure is out of control. As is the case with so many of the arguments that we have been discussing, there appears to be no empirical evidence for that assertion. It is beginning to make argument impossible for the Opposition. It appears that the Government can put forward a theory and a practice, but they do not have to adduce any evidence for it. [Interruption.] The hon. Member for Cambridge (Mr. Rhodes James), who uses the distinguished and elegant language of the modern historian, has just referred to me as an idiot. I do not mind that, because I could scribble the hon. Gentleman's knowledge of economics on one fingernail. I shall ignore——

Mr. Robert Rhodes James: I beg to move, That the Question be now put.

Mr. Deputy Speaker: The hon. Gentleman cannot do that at this moment.

Mr. Sedgemore: That just shows how vicious, nasty little spite can somehow intervene in our debates. [Interruption.] I believe that I am being threatened, in a parliamentary way, by this pipsqueak opposite me. There should be some order in the House. The hon. Member for Cambridge would do well to go and have a quiet cup of tea in the Tea Room and we can all be good friends tomorrow when it is all over.
I am concerned with a serious economic point. We should get back to statistical analysis, although I do not expect all hon. Members to understand it. Local government expenditure as a proportion of gross national product has been almost constant in the past 15 to 20 years. Local government expenditure as a proportion of gross domestic product in the past four or five years has also been almost constant. It has varied between 12·9 per cent., 13·4 per cent., and 12·3 per cent. of GDP. That is not evidence of massive overspending. The Opposition must therefore recognise that if we are to start to move back to full employment, we cannot expect to recreate all the jobs in manufacturing industry which we have lost, even though we must sustain a strong manufacturing base and encourage investment in manufacturing. We must therefore be prepared to create jobs in the Health Service, the social services, education and public sector leisure services.
That must be a deliberate policy objective. It could create jobs and enhance the quality of life. Because it would help stimulate demand, it would encourage economic growth, increase income and stimulate employment. Some people have said that we do not have the money to become a full employment economy again. It was implicit in the Chief Secretary's speech that there must be big cuts in public expenditure. It is argued that we do not have the money to carry out the programmes that Opposition Members argue for.

Mr. Hoyle: My hon. Friend is developing an important point. Does he agree that it is not money but the will that is lacking? Britain is extremely wealthy. We are the only European country that is self-sufficient in energy

especially oil. The revenues that accrue to the Government are unique in Europe, so it is really the will for full employment that is lacking.

Mr. Sedgemore: My hon. Friend is partly right. It is a pity that we have used our North sea oil revenues on consumption in the past two or three years, and that we shall continue to do that. That action is burning up vital capital for the country, just as we waste assets if we sell them off.
There might be many problems with the Labour party's economic programme, but the one problem that does not exist is finance. Massive under-used resources such as empty factories and people out of work mean that the problem is not one of finance. I have already referred in my short speech to the fact that we can borrow more, but all right hon. and hon. Members know that we can save money if we put people back to work instead of paying them not to work.
We have specific figures on this. Mukherjee, the Indian economist, developed the figures and presented them to the Treasury about 10 years ago, and, to the best of my knowledge and belief, they are accepted by the Treasury. Those figures suggest that every person out of work costs the Exchequer £6,000 per annum. That is a large amount of money, if 3 or 4 million people are out of work. That figure—it is broadly accepted that the House of Lords inquiry used the figure of £5,000 per annum, and the Members of the House of Lords are not all radical Socialists — is made up of unemployment benefit, redundancy payments and lost taxes.

Mr. David Winnick: Is my hon. Friend aware that in the interview last night the right hon. Lady the Prime Minister denied that unemployment was costing the country £15 billion? She said that it was costing £6 billion, and obviously she was working on the direct cost of unemployment benefits and supplementary benefit. Would my hon. Friend not agree that it is important— the Prime Minister deliberately refused to acknowledge this — to take into account the revenue loss to the Treasury? Thus, when we said during the last election campaign that the total cost was £15 billion, we were right, and the Prime Minister was misleading the country with what she said yesterday.

Mr. Sedgemore: I am grateful for that intervention, because it puts in a nutshell what I was explaining slightly laboriously. The only dispute between us is the figure of £15 billion. I have been discussing this figure with the economic adviser to the current leader of the Labour party, Henry Neuberger, who is one of my constituents, and he is tempted to put the figure slightly higher. As he is a professional economist, I am tempted to accept his slightly higher figure. There are, therefore, billions of pounds to be saved by putting people back to work. That would fundamentally affect the structure of the Finance Bill.
As the House has heard, the Finance Bill helps the better-off in society in a variety of ways. When the Chief Secretary of the Treasury opened the debate, we heard an esoteric argument about child benefit and its effect on the poverty trap, and on poverty. Whatever is the effect on the poverty trap of not raising child benefit by more than the rate of inflation, there can be no doubt about its effect on poverty in the country. When the Chancellor predicates 3 per cent. economic growth in the country, he should surely


seek to secure that a large part of that economic growth goes to those who are worse off. There are better ways of distributing that money than by raising the tax threshold.
If income is to be redistributed a massive review of the welfare state is needed. Indeed, a massive review of the two welfare states in the country is needed. One welfare state is composed of supplementary benefits, child benefit and housing benefit. The other welfare state—I am glad to see that the Chancellor has acted in one respect—is composed of tax relief, life assurance policies, tax relief on mortgages, the abolition of capital taxes on houses, and the way in which university grants and so on in the education system are distributed. We must give consideration to that second welfare state. On analysis of the figures, one finds that someone earning £15,000 a year gets more out of our welfare state than someone earning £7,000 a year. That cannot be right. We must give consideration to that second welfare state.
We shall become a banana republic without bananas, and a backward fractious island off the coast of north-west Europe, with a culture in irreversible decline if monetarism remains the main thread of Britain's economic policy. When the Minister winds up the debate some time tomorrow, I hope that he will either seek to sustain the Government's monetarist argument, or drop it.

Mr. Eric Cockeram: I intend to return to the subject of this debate—if I can remember what it is. I certainly do not intend to follow up all the points raised by the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore). Suffice it to say that he covered a wide range of subjects, but that the one thing that he did not display was anyy sense of modesty. He clearly had his own self-opinionated answers to all the problems of this country, Europe, and the rest of the world. He quoted extensively from his own writings. I always think that it is a sign of a third-rate self-appointed economist if he has to quote his own writings in support of his own views. However, he established his own level in this House when he told us that he disagreed with the policy of the previous Labour Government, but stayed on as a parliamentary private secretary because he could then obtain inside information. He later leaked that information and was sacked. The House will form its own judgment of that particular contribution.
However, I welcome the Bill. It was welcomed in the country last month, when my right hon. Friend the Chancellor presented his Budget. It will no doubt be further welcomed next month, when some 20 million workers and taxpayers get a tax refund in their pay packets and pay less tax in subsequent weeks. The raising of the tax threshold by 12·5 per cent. was a bold gesture, but this Budget will primarily be remembered because the Chancellor abolished two specific taxes—the investment income surcharge and the national insurance surcharge.
It is perhaps significant that the national insurance surcharge — that tax on jobs — was introduced by a Labour Government and abolished by a Conservative Government. I cast my mind back 12 years, to the last time that any Chancellor totally abolished two whole methods of taxation. It was, of course, a Conservative Chancellor who last did that, in 1972, when Mr. Barber— now Lord Barber — abolished purchase tax and selective employment tax. History has repeated itself, because the selective employment tax was a tax on jobs that was

introduced by a 1960 Labour Government, and abolished by a 1970 Conservative Government. In this Budget the national insurance surcharge, a tax on jobs introduced by a 1970 Labour Government, has been abolished by a 1980s Conservative Government.
I am concerned about the tax that the Chancellor has introduced on bank interest, which is similar to building society taxation. I believe that the Chancellor has not properly thought it through. At present all bank interest is subject to tax from those who are liable to taxation. However, it is not subject to income tax from those who are not liable for such taxation. Under clause 27, those who are not subject to income tax will nevertheless have to pay composite rate tax on bank interest in future, including children, pensioners and others on low incomes. I find it difficult to accept that as being Conservative policy.
I note that national savings are exempted from that particular tax. Tax is paid gross on, for example, interest on a Post Office savings bank account. That is an anomaly. I note also that the Chancellor has exempted from taxation at source bank deposits of £50,000 or more which the Bill describes as deposits
with a licensed deposit taker".
In layman's terms, that is a bank. Tax has to be paid in arrears, but it is not deducted prior to the payment of interest on the deposit.
It is an anomaly that those who make large deposits with banks do not have tax deducted at source, but that those who make small deposits at banks do even when people making small deposits would not otherwise be subject to income tax. That is difficult to accept from a Chancellor who preaches the doctrine of fiscal neutrality, to which I subscribe. I support a Government who believe that the private sector should be encouraged and not put at a disadvantage compared with the public sector.
The trustees savings bank is a classic example of a bank which takes deposits from children, pensioners and people on low incomes from whom tax will, in future, be deducted.
I thank Treasury Ministers for correcting an anomaly which is dealt with in clause 43 concerning corporation tax and trustee savings banks. The provision is backdated to 1982. Trustee savings banks suffered unfair taxation compared with their competitors, the clearing banks. I thank the Chancellor for acknowledging and correcting an injustice. I hope that he will bear in mind what I have said about taxing those on low incomes. The Treasury has not properly thought through the consequences of that proposal.

Mr. Austin Mitchell: It would be rash and impetuous to rush in to follow the hon. Member for Ludlow (Mr. Cockeram) in his praise of the Budget. There is no need for any of us to praise the Budget, or this enormously long Finance Bill. It must be the longest Finance Bill in recent years or decades.
There is no need to praise it, because the Chancellor himself has been so lavish in praise of his own creation. Lawson's law on budgets will come into operation. It is that the more lavish the praise of the Budget at the time, the longer the dying whimper of the Finance Bill and the more quickly it is forgotten.
The transformation of the Budget into the Finance Bill has been grossly overpraised by the Chancellor and by his


minions in the press, which seem to wait on his every cue. The previous Chancellor was modest, which was appropriate in the circumstances. This Chancellor is extravagant in praise of his creations.
My most vivid memory of that self-esteem is of January 1981 and the famous Zurich speech at the height of the self-generated depression and the acceleration of unemployment in which the Chancellor said that he was not trying to pretend that the Government's record was one of unalloyed success. That is the most modest praise that the Chancellor has uttered. There has been a positive son et lumiere about this Finance Bill.
The Chancellor has changed his approach. My right hon. Friend the Member for Leeds, East (Mr. Healey) said that the efforts of the previous Chancellor could be compared with being savaged by a dead sheep. This Budget is like being butted by an opinionated goat. Both methods are irrelevant to our economic position.
I take issue with my hon. Friend the Member for Hackney, South and Shoreditch on the role played by monetarism in the Budget. The Chancellor set out to make an intellectual contribution to monetarism, especially in his Zurich speech. His contribution to theory is to make it up as he goes along, rather than following the text and authority in any strict way.
In the Budget, the Chancellor is walking away backwards from the monetarist commitment during the early part of the Government's term of office. It is not so much a monetarist Budget as a conservative Budget— small thinking, short-sighted, largely irrelevant to the real problems of the country and concentrating on shifting deckchairs on the Titanic.
We can see that shift in a whole range of ways. For example, there is a shift away from M3 with the introduction of MO. That is an appropriate measure of money supply for a Government who are concentrating on bashing the workers. It measures the spending power of the working class in cash, as many of them do not have the bank accounts or credit cards that add to the inflationary pressures in our society. The Government will keep MO within narrow limits. They will increase unemployment to keep down the purchasing power of the working class.
That measure has been combined with a cocktail of measures that are an enormous escape from the essential folly of the concentration on M3 in earlier Budgets. It is a cocktail of M3, M1 and PFL2 which, although no longer used, is a part of the Government's calculations. Those are measures of the economy, and people talk of little else in wage negotiations in Grimsby. If they are intended to condition expectation, it is difficult to envisage what insight the Chancellor has into the minds of the people who, he hopes, will be influenced by measures that have failed and which he has failed to observe. At least there is not the earlier obsession with M3.
In a slight measure, it is an expansionary Budget. The Treasury and Civil Service Select Committee makes that clear. It is nothing like what is needed in view of the scale of the self-generated problems. It is interesting that the Chancellor will not say that it is expansionary. While he is retreating backwards from monetarism, he still has to justify what he is doing in the theology of the original follies. He is in a curiously ambivalent intellectual position.
Another sign of relaxation is in the public sector borrowing requirement. To concentrate on that measure is in itself a folly——

Mr. Tim Smith: The hon. Gentleman quotes the Select Committee as saying that it is an expansionary Budget. However, the hon. Member for Hackney, South and Shoreditch (Mr. Sedgemore) told us that it is a restrictive Budget. Why is it an expansionary Budget? The report makes that statement without any supporting evidence.

Mr. Mitchell: As the Chancellor cannot explain why it is an expansionary Budget, it is a little much to expect me to do so. There is no contrast with the comments of my hon. Friend the Member for Hackney, South and Shoreditch. He said that the Government's stance is contractionary if we allow for the cost of unemployment.
I am grateful to the hon. Gentleman for allowing me to make this point. If we allow for the cost of unemployment — on the House of Lords estimate, it is £5,000 per person out of work in lost tax revenues, benefits paid out and lost productivity—and multiply that by the number of unemployed — even though the figures have been sanitised, cleaned up and disguised in all possible fashions —that must come to more than £4 million. Contrary to Keynesian expectations, the Government are taking a contractionary stance towards the economy and damping down any pressures to generate recovery in the economy. To say that the Budget is expansionary is to take a conservative view of expansion. Bearing in mind the scale of the problem and the depth of the depression, this is a minimus Budget in all respects.
The Government appear to be obsessed with the public sector borrowing requirement, which seems to be their sole measure. There is no rhyme, reason or rationale for taking that approach. What other Government measure the success of their policies by the size of the PSBR? The Goernment are preoccupied with a mythical measure that tells us nothing instead of directing themselves to the real world of jobs, production, employment, manufacturing and bankruptcies. It happens that the Prime Minister does not like borrowing, but even the shop at Grantham must have been based at some stage of its existencee on borrowing. Probably that was not so in the latter stage when it was going down the drain fairly quickly. If it was at all prosperous at any stage, there must have been some borrowing behind that success.
Even the obsession with the public sector borrowing requirement is being modified by the privatisation procedures, which are being used to allow the Chancellor of the Exchequer to escape from the strictness of the PSBR approach. He is flogging off more and more national assets in the bankrupt programme which he calls economic management. The flog-off produces enormous returns for the Government's friends. These returns are achieved at the nation's expense for the assets belong to the people. The gradual resiling from the strict rigours of monetarism and the walking backwards from the doctrine wihout acknowledging what is happening have been noted by the Select Committee on the Treasury and Civil Service, whose report was made available this morning and which I commend to the House. It concentrates on praising with faint damns. That is the only possible approach for anyone with any intellectual integrity to take to the Budget.
There are faint damns because we, the members of the Committee, doubted whether the claimed stimulus to


investment would materialise. We doubted especially the prospect of bringing investment forward and the long-term effect of the Government's cuts: in tax incentives for investment. There will be no transference from machine to labour, for example, because investment will fall in a nation which has never invested on an adequate scale and never made the best of its prospects. We doubted, too, the prospects for public sector investment, which has been emphasised strongly by the Select Committee on the Treasury and Civil Service over the years. The Government seem to have ignored the gradual rundown of crucial public sector investment to provide the infrastructure that will improve the quality of everyone's life and the base on which industry can operate effectively. That investment, too, is being eroded by the Government. The report concentrates on the need for investment.
The Committee doubted the prospects for growth. There is no evidence that even the Government's assumptions on growth are possible of fulfilment. The recovery, such as it is, is taking place in the high streets and not in the factories. It is a recovery that is stimulated by an expansion of credit and by people digging into their savings at a record rate. It has not washed over into production within British industry, into work on the shop floor. The recovery in that sector is modest and there is every possibility that the recovery of which the Government talk will peter out as it is not firmly based on production.
The Committee doubted the strength of the recovery compared with past recoveries in the faltering British economy. As my hon. Friend the Member for Hackney, South and Shoreditch said, each recovery has been less strong than its predecessor and each depression has been deeper than its predecessor. Certainly this recovery is far worse than the recovery which took place out of the depression in the 1930s.
William Keegan's book "The Thatcher Experiment" demonstrates clearly the long legacy of mistakes generated by the Conservatives' simplistic approach to economic management, the simple prejudice which has influenced and dominated their economic policies since 1979, the belief that they alone have the source of all knowledge and wisdom, that they alone know what to do with the economy. They have pursued those policies with disastrous results, leading to a record level of bankruptcies, the closure of capacity which Britain will need if we are to survive in an increasingly competitive world, the export of capital which has helped to fuel growth and investment in our competitors, and the destruction of skills and a rise in unemployment.
As we debate this Finance Bill we must ask what has been achieved by those polices. We were told that we must go through the sacrifices, perhaps even the torment, to enable us to lead the world in recovery and in coming out of a slump into which we had been led in the first place by the follies of the Conservatives. What has been achieved is a faltering, half-hearted recovery, as shown by the OECD main economic indicators. The figures, published in March last, were for the previous January —12 months seasonally adjusted, January to January—showing our recovery. We are supposed to be leading the world in that recovery, yet our competitor economies seem to be doing better than we are.
In GDP terms, our growth in that year was 3·2 per cent., the same as Japan and West Germany. But more than 1 per cent. of that 3·2 per cent. in our case was the

oil economy, which is a transient factor in the long-term strength of the British economy, so that our real rate of growth was less than that of Japan and Germany, and less than the United States, at 5·2 per cent.
In terms of production—as opposed to a high street recovery based on the importation of Japanese video recorders and other consumer products which destroy jobs and which are purchased by people digging into their savings—the increase in production in Britain. at 4·5 per cent., was less than the United States, at 15–1 per cent., Japan, 9·6 per cent., and West Germany, 8·2 per cent. In other words, it was about half of that of our industrial competitors.
In manufacturing output the figures are even worse, an increase of 2·2 per cent. as against America, 16·3 per cent., Japan, 7·7 per cent. and West Germany, 7·9 per cent. If that is leading the world out of depression, there is precious little in the Government's performance on which they can congratulate themselves.
The Government say that they are bringing down inflation. What has been the effect of that on the economy? Unit labour costs in Britain, which should be the height of the Government's achievement if their policies were justified, increased by 2·5 per cent. in that year, as against a fall in the United States of 4 per cent., of 0·7 per cent. in Japan and of 3·6 per cent. in West Germany.
The reason why our unit labour costs are increasing is simple. If the economy grows, production expands and unit labour costs come down as the unit costs of production come down because of that expansion. Improvement in that respect is a feature of growth, not of the misery and decline through which the Conservatives have put our economy in the last few years. In other words, there is no basis for long-term sustained recovery.
In the long term we are sliping back into the norms of inadequate British performance. After all we have been through, we have reverted to something worse. Earnings are still increasing at a faster rate than production, despite the Government's self-proclaimed achievements. All the sacrifices and the terror of unemployment have been experienced for nothing. As always, investment is low. We are still losing world trade, despite our already minute portion. Under this Government, exports continue to do badly, and imports have surged taking an increasing share of the British market.
Average productivity has worsened. The much-vaunted achievement in productivity is simply a feature of less productive capacity because of old capital stock and low investment. We have seen an artificial improvement in productivity which takes no account of the burden on the unemployed and the productive sector of the economy. We are placing the increasing burden of unemployment on a shrinking productive sector.
The Institute of Fiscal Studies has pointed out that the effect on the economy of the increase in productivity is similiar to a cricket team attempting to increase its batting average by shooting the last four batsmen. That action would certainly increase the batting average. The improvement in productivity is simply a feature of more rapid closures and bankruptcies under this Government. The underlying improvement is minimal.
The exciting new initiatives and measures taken by the Government and embodied in the Finance Bill have resulted in Britain being in the same old dreary rut, with the additional burden of the vainglorious self-congratulations of the Chancellor and the Prime Minister.
In the past, people asked, "Why are we not doing so well?" Now they tell us how well we are doing and ignore the figures. They are escaping from reality. We are back in the rut of comparative decline after four years of Thatcher economic experiment. Britain has declined while other countries have surged ahead.
We have declined slowly from a major position with a large share of world trade. We have experienced full employment and the benefit of post-war growth in investment, especially under the Labour Government between 1945 and 1951. Now after the trauma of the Thatcher experiment, we are still in a period of comparative decline. We have 4 million unemployed and an economy suffering from inadequate investment, a reduced productive capacity and a reduced share of world trade. This country must carry those burdens as we continue the slow, miserable whimpering slide that the Conservative party promised to turn around when it came into office. The Government promised to provide answers.
The Chancellor has shown a shift away from the theory of monetarism. That is no surprise, given the disastrous scale of the failure. Even a Chancellor as vainglorious as the present one can recognise some elements of reality.
It is worth while pointing out the achievements, which my hon. Friend the Member for Hackney, South and Shoreditch did so eloquently, and the groups in whose interests they were made. Lester Thorough's new book "Dangerous Currents—The State of Economics" makes an interesting reflection. He says that every economic policy serves an interest and is presented as a major contribution to theory. In practice and performance, it serves one interest or another. He says:
The basic problems spring from the fact that there are no public policies so good that everyone's income goes up or so bad that everyone's income goes down. In short, every policy has income distribution effects. In economic theory it is possible to avoid the problem using the concept of Pareto-optimality in which concept state A is better than state B if the winners in state A could compensate the losers in state B.
The winners in state A never compensate the losers in state B. This policy has shifted resources from the productive sector of the economy, the working class and the less-well-off to the better-off sections of society represented by Conservative Members. The gainers have been those with capital, those living on interest and those who have seen the pound increase in value.
When the Prime Minister talks of sound money she is forgetting that a high exchange rate and high interest rates, which go with the policy of sound money, transfer power and wealth from the poor to the rich; from our section of society to that represented by Conservative Members. The disasterous slide into the semi-retired economy, the Denis Thatcher economy—a land fit to retire to on the south coast, on capital with cheap servants while the mass of the nation is reduced to poverty—is transferring money to their section of society, a policy which the Finance Bill accelerates. The policy is designed to further the interests of one sector of society.
In a misguided moment of hilarity and humour which occurs rarely enough in Finance Bill Committees, in Committee on a previous Finance Bill I compared the Prime Minister to Captain Queeg standing on the bridge, the light of madness in his or her eyes, depending upon how one interprets Queeg, clicking balls — a painful operation for those who have been clicked in that way

although "clicked" perhaps suggests something harder than that which took place for those who were privatised or deprivatised during the Prime Minister's triumphant period in office—and heading the ship into the storm.
The only difference with the new Chancellor is that the capacity of the ancient manufacturing industries —the internationally-traded sector by which we live and which we must have if we are to survive as a competing economy — has been irreparably damaged by the four years of Thatcherite folly. Now, as the captain resiles from monetarism, we are abandoning faith in the compass. At least in the past the Chancellor told us that he knew what he was doing—follow the M3 compass and all would be well with the economy. He has now given up faith in the only steering instrument he took on the trip.
It emerges clearly from the proceedings in the Treasury and Civil Service Select Committee that we have a Government who are embarking, not on the basis of plans, insight into where they are going, or knowledge of what is happening to the economy, but on the basis of faith, prejudice and prayer. I should like to quote from the Committee's report on that matter. When I asked the governor of the Bank of England, who should know about these things, about where the economy was going, what would bring down unemployment, even if we achieved all the goals of low inflation — a reduced PSBR, money supply within the bounds set for it by the bank and the Chancellor—in a world where competitor Governments and industries are investing and being fuelled by a flow of investment from this country, he said:
I can only answer that question by saying by what I call the entrepreneurial ambition of the people in this country in the environment which encourages them to increase their business.
The entrepreneurial flair which has sustained us so well since the war will take us out of the recession once we have achieved all the mythical objectives that the Government have set. The Chancellor replied in similar bald terms to questions about what will happen to the economy. When I asked the Chancellor:
Has the Treasury carried out any analysis of what is going to make good the difference when the oil revenue begins to fall off? What is going to contribute to our balance of payments and what needs to happen for that to occur so we do not run into balance of payments constraints of the old type …
he said:
What needs to happen is that market forces need to be allowed to work free from Socialist constraints of the old type.
That was the answer — no compass, no plan, no organisation, no thought—just prejudice; just let us get rid of the constraints. I then asked him:
Has the Treasury analysed it, apart from that rhetoric?
The Chancellor replied:
I have no idea. I hope most of my officials at the Treasury have better things to do than to look in crystal balls and try and recreate the national plan.

Mr. Mark Fisher: My hon. Friend is talking about crystal balls and about the evidence that was given to the Select Committee. Is he as surprised and apprehensive as I was at the reply of a Treasury official to the question:
What are your estimates of unemployment for these years?
talking about the medium term? The Treasury official said:
We do not have precise estimates of unemployment over the whole period.


Is it not a matter of concern to my hon. Friend that the Government are trying to plan an economic strategy and yet are making no estimates of the effect of that strategy?

Mr. Mitchell: I am grateful to my hon. Friend. The most horrifying thing about the interviews that we conducted with the officials of the Chancellor and the governor of the Bank of England was the simple emphasis on blind faith as an instrument of policy in a world where other people are trying to plan for growth and deciding to channel investment in such a way that some industries can develop and others can be held back so as not to absorb capital and labour. In a world in which states are participating and planning, or at the very least acting as ringmaster in the whole process, all we have in this country is faith in the market and in blind, simple prejudice. There is no concept of what will happen if that blind faith is not justified. There is no conditional planning, no alternatives envisaged and no idea how we will escape from the problems that even I, with my limited economic knowledge, can foresee.
When I asked the Chancellor:
Surely it is important to analyse the problems and see what is going to happen and take steps to prevent any disasters happening.…
he said:
That is not analysis, that is prediction and long term prediction is usually a futile occupation. What is more important is to analyse what are the conditions that facilitate a successful economy and those conditions are the absence of constraints, freedom as far as possible for market forces, the elimination of inflation, and those are the conditions which we are securing by our policies.
In other words, we are securing a return to the basic economic conditions of the 18th century. What the Chancellor neglects is that that was the kind of climate which produced industrialisation only in this country. Other countries planned and invested for it and protected it. They are still doing that.
With our blind, naive faith we are laying ourselves open to an ultimate disaster once the cushioning factor that sustained the Government so well — oil — begins to dwindle. I have seen estimates that 40 per cent. of the known reserves are correct, but it would be interesting to know whether the Government have calculated that they can carry on in this foolish, headstrong, wasteful fashion for four years until the next election and leave the incoming Labour Government to clear up the mess and the disaster which will almost certainly result as oil's contribution to tax revenues and to balance of payments begins to dwindle.
We have seen an economic policy, of simple, blind faith. This is not going back to the Crippsean course, as was once said of a Labour Government in the 1960s. There is no need for that. This is going back to the Selwyn Lloyd doldrums of the early 1960s and all those brave hopes——

Mr. Tom Clarke: As I listened to the interesting speech that my hon. Friend was making, I tried to reflect on the view that my constituents would take of the objectives of the Finance Bill and of the interview of the Select Committee with the Chancellor.
In my constituency, unemployment is about 25 per cent., so the House will not be surprised to hear that the major objective of my constituents is a reduction in that ridiculously high level of unemployment. In the interview with the Select Committee to which my hon. Friend has

referred, did the Chancellor set any date for the reduction of unemployment? Did he set it as a major objective? Did he offer any hope to the unemployed among my constituents, especially the young people that I represent?

Mr. Mitchell: I am most grateful to my hon. Friend for that very important intervention, because he has mentioned a subject with which I am also preoccupied. Under this Government, male unemployment in Grimsby is now one in five—a statement of shame that seems to have been ignored by Conservative Members. That rate applies in a port which since the war has always done well economically.
Neither the Chancellor nor the officials — and certainly not the Governor of the Bank of England— mentioned any possibility of a fall in unemployment. Indeed, they posed a simple problem. Their estimates of growth after this year were slightly over 2 per cent. We have had all the growth that we are getting, and that will bring down the average after this year. Their estimate of the likely improvement in productivity was 1·5 per cent. Their estimate of the increase in the labour force was 0·5 per cent. In other words, if there is any increase in productivity over 1·5 per cent., unemployment will automatically rise on that kind of growth prediction. Unless they can get growth up beyond that level—there is no indication that they can, because they have no concept of how to do it, apart from faith and prayer, and prayer seems to be in short supply these days in Downing street, although glycerine is still in fashion — the unemployment rate must rise. That is why the Government have suddenly abandoned their optimistic statements that unemployment is on the turn and is about to fall. There is now no possibility of unemployment coming down. That is why the Finance Bill is a confidence trick on people. The Chancellor makes brave noises about encouraging industry and helping to stimulate jobs, but there is nothing in the Bill which could achieve either of those objectives. Certainly there is nothing to expand an economy whose main disastrous problem is a deficiency of demand for the products made in Britain.

Mr. Jim Craigen: I do not know why my hon. Friend is surprised that there is nothing in the Finance Bill that will reduce unemployment. The Chancellor said very little on the subject when introducing his Budget.
My hon. Friend will be aware that the Manpower Services Commission, in its recent corporate plan, has shown that to size of the labour force will, if anything, increase, and apparently foresees very little prospect of any sizeable reduction in unemployment. Moreover, my hon. Friend will be aware that some of the increases in employment which have taken place have tended to be in part-time jobs.
Finally, will my hon. Friend comment on the recent pronouncements by the chief executive of the National Economic Development Council, which offer very little hope to the Chancellor of the Exchequer, despite the fact that last year, in his desperation to find jobs somewhere, he asked the council to look into future employment trends in the United Kingdom?

Mr. Mitchell: I am most grateful to my hon. Friend for his very telling points, because those are bodies — particularly the MSC and the NEDC—which are more concerned with the real world. The Chancellor is


concerned with financial markets and the interests of finance, and of those who make and manipulate that money, rather than those who actually make things and give employment. The MSC report is one of the most gloomy, but objective, forecasts that we have seen. The Government are taking refuge by avoiding the problem altogether, but at least they have stopped telling us that the reduction in unemployment is just round the corner, as they have been telling us for the past four years. On a learning curve, that is some progress.
As my hon. Friend the Member for Livingston (Mr. Cook) said in a debate on the Finance Bill last year, to this Government unemployment is not the problem but the answer. That is the difference between the Conservative party and the Labour party. To the Labour party, unemployment is a problem which we have a national duty to solve, because we must give people an investment in lives, jobs and in a future for them and their country. The Conservative party regards unemployment as a means of managing the economy to damp down the forces not only of demand but of wage pressure, to break the negotiating power of the trade unions, to cow the working classes, and to make people so frightened for their jobs that they will not ask for substantial wage increases. That has been their weapon, and what they have called the new realism is the new fear.
The Government should be ashamed of the fact that, after five years of high unemployment, they cannot produce a finance Bill to solve the problems that face many of our people.

Mr. Craigen: Unemployment trends are different across the country and affect some areas more than they do others. If unemployment had a greater impact in the south-east of England, the Government's policies might change. However, at present it affects our traditional manufacturing areas.

Mr. Mitchell: That is part of the problem. Not only is there a north-south differentiation—my hon. Friend is right to say that the Government would have acted had unemployment hit their supporters in the same way as it has hit ours—but there are differences between groups. The Conservative party has a preponderance of red-faced farmers who have done well out of the Common Market, professionals, and people who have no connection with the real world of making and doing things, who come here and expound the economics of Sandhurst, the Inns of Court and the law schools—anything but the economics of jobs, people and production, which are what we need.

Mr. Alan Howarth: Perhaps instead of stoking fears about future unemployment the hon. Gentleman might find the humility and social concern to remember that under every Labour Government since the war, unemployment was higher when they left office than when they took office and, therefore, to reflect that Socialist policies have done great damage to employment and would do so again.

Mr. Mitchell: The hon. Gentleman is repeating the canard developed for the previous general election, which was disproved at the time. It is not true that unemployment has increased under every Labour Government since the war. I agree that, to our shame, unemployment increased

to 1·5 million during the previous Labour Government. However, it had decreased to 1·3 million when we left office. It is important to remember that that increase occurred when Britain was facing the worst economic crisis since the war, and when the Government did not have the supreme benefit of oil. Oil gives this Government the ability to expand the economy, to avoid the balance of payments constraints which have affected Britain since the war, and to grow, invest and organise for the future. But what have they done with that oil? They have used it to finance the flow of manufactured imports that has destroyed British jobs, and have used the tax revenue to support the unemployment generated by the balance of payments. They have wasted that supreme national asset which God put in the North sea to prove that he was not a Muslim. Although they inherited a decreasing rate of unemployment, they accelerated it rapidly.
The brave hopes of regeneration have turned into the tax fiddles of this Finance Bill. The problem is that in the meantime——

Mr. Jeremy Corbyn: In his most interesting contribution, will my hon. Friend consider the number of bankruptcies under the Conservative Government in relation to their idiotic remarks about unemployment under Labour?

Mr. Mitchell: The Government have merely produced a series of palliatives designed to give the impression that something is being done for small businesses when large business and huge employers of labour are going bust, closing down capacity and laying people off at record rates, in addition to all the small firms that are going bust. For the Government to claim as an achievement the help that they give to small businesses that they drove to bankruptcy in the first place is one of their supreme hypocrisies. Another is a business community more supine and quiescent to their policies than ever before because business men are more interested in the tax advantages to themselves as individuals than in the effects of the Government's economic policies on their production or their employees. The business community has taken everything that has been handed out to it and has rejoiced in the machinery for its own destruction, having learnt to love and to grovel before the rod for its own back.
In the United States, by contrast, although Reagan came to office committed to Thatcherite economics the whole thing was reversed in little more than a year. Moving into Keynsian— to use a dirty word— deficit financing on a scale that would terrify the British Government, Reagan abandoned the money supply targets and was printing money like it was going out of fashion. The result has been the creation in just over a year of 4 million jobs in the United States. That happened because the American business community howled in protest at the consequences of the earlier policies while our business community sat down and took them.

Mr. Hoyle: Why is it that Sir Terence Beckett, director general of the CBI, who talked of bare-knuckle fighting with the Government when unemployment was far lower, no longer voices such opinions and indeed has been praising the Government although everything is getting worse?

Mr. Mitchell: It is because British business men are more concerned with their self-interest as business men


than with the interests of business. That is why the bare-knuckle fighting turned into bare-bottom kissing within a matter of hours. It could not have happened in any other community in this country.
I represent a Humberside constituency in which one of the few surviving industries is casing air in tin and calling it a caravan and I go every year to the caravan fair at Olympia. In 1981, I sat next to a caravan manufacturer. When I asked how business was, he said that it was terrible as people were no longer borrowing money to buy caravans because of the high interest rates. When I said that the exchange rate could not be helping much, he said that it was a disaster and that the industry's dominant share in the Dutch market had been lost to the French and the Germans because the British industry could not compete due to the value of the pound. Thinking by this time to stir some animosity against the Government, I asked him how business was generally. He said that it was awful and that it was down to a two-and-a-half-day week. Moving in for the kill, I said, "You cannot think much of Mrs. Thatcher's economic policies." "They are wonderful, marvellous," he said, "At last Government have the power to manage!" That is what he was interested in— not the ability to make, but the power to manage. Interestingly enough, that manufacturer—Caravans International of Newmarket—went into receivership last year.

Mr. Jerry Hayes: I hesitate to interrupt the hon. Gentleman, who has the unique capacity to hold himself utterly spellbound. I am one of the few supporters of his proposal to televise the House. I believe that it would be a tremendous asset, as at least we should have the opportunity to switch him off.
I want to ask the hon. Gentleman about business confidence and what is happening to Britain and British industry. If he visits my constituency of Harlow he will see that major industries such as Cossons and STC are optimistic and are taking on more and more people.

Mr. Mitchell: It is clear that business, seeing the future under the Government's economic policies, are investing overseas at a more rapid rate than has ever occurred in British history. That is the extent of their faith in Britain's economic policies. Indeed, an extra £15 billion has gone overseas and investment in Britain has dropped by £27 billion since 1979.
If the hon. Gentleman is telling us that all depends on the new industries, I can only say that the new industries will come on the back of the old industries. New industry, investment, techniques and technology come to a economy which is prosperous, growing and with a tradition of investment. They do not come to a dump with an excessive rate of unemployment pressing on the rest of us, which has been relegated by the policies of its Government to the periphery. The Government have produced an economic Northern Ireland, vis-à-vis the Common Market. We shall get a flickering of new investment, nothing more. There will be no sustained pattern of new investment, because there is nothing to bring that investment here in the present climate and there is everything to cause firms to send their capital overseas. Is the hon. Gentleman's point simply that people will not be watching television at this time of night but watching forms of pornography other than the hon. Gentleman and his party?

Mr. Stuart Randall: Perhaps the hon. Member for Harlow (Mr. Hayes) does not have as many problems as places such as Hull and other parts of the north-west and the north-east. The Government, in their White Paper last December, stated categorically that the Government will cut back their investment. If the Government want to rely upon private investment to encourage investment in the regions—that is their policy—if they are going to cut back on public investment, places such as Hull, the north-east, the northwest and Scotland——

Mr. Deputy Speaker (Mr. Harold Walker): Order. I am not sure whether the hon. Gentleman is intervening or seeking to make a speech, but we had better get back to the speech of the hon. Member for Great Grimsby (Mr. Mitchell).

Mr. Mitchell: I am grateful to you, Mr. Deputy Speaker. None the less, my hon. Friend's point is valid. It is insulting for the hon. Member for Harlow (Mr. Hayes) to tell us that his constituency is doing well when I have described what is happening to the rest of the country,. particularly to those areas which do not have and have not had the sustained high standard of living of the past 25 years of the south-east and have not the fat and the reserves to ride out the recession in the way that the south-east has. It is a peculiar kind of complacency to reflect on Britain's problems with the attitude of "I'm all right Jack" — which essentially is what the hon. Gentleman is doing.

Mr. Hoyle: Will the hon. Member for Harlow (Mr. Hayes) tell us the unemployment rate in Harlow in 1979 and now?

Mr. Mitchell: I see that there is no reply to that question. The hon. Gentleman does not have the statistics. There has been an increase, even in the south-east.

Mr. John Golding: Does my hon. Friend think that we should table questions on the size and percentage of youth unemployment, adult unemployment and long-term unemployment in Harlow to see precisely how well his constituents have done under the Government?

Mr. Mitchell: I hope that my hon. Friend's intervention eliminates the insulting point made by the hon. Member for Harlow (Mr. Hayes) to hon. Members, such as myself, whose constituencies have a male unemployment rate of one in five. Many of my hon. Friends have even higher rates in their constituencies. That is a national tragedy and not something about which to rejoice or to make party political points.
Under the economics of monetarism, from which we are slowly and painfully resiling, enormous damage has been done to the real economy in the pursuit of unattainable objectives. The Government could not control the money supply; all that they could do was to ration money, which they did by putting up interest rates, with the result that, because we are an oil power, the pound went up as money flowed into this country which was regarded as a safe funk hole for the funny money that was flowing round the world.

Mr. Stuart Bell: Does my hon. Friend agree that the Government's greatest mistakes were to push interest rates up to 21 per cent. and the value of the pound to $2·40? Was not that the direct cause of the creation of 2 million unemployed?

Mr. Mitchell: I agree absolutely. The Select Committee on the Treasury and Civil Service, in a report that appeared just before the general election—it was disowned by the Chairman of the Committee, but owned up to by the rest of the members, because it was the view of the Committee — said that more than half of the unemployment that had developed since 1979 was a direct consequence of Government policies on interest rates and the exchange rate. The Government plunged unthinkingly into that folly without an idea of what they were doing. That accelerated the rate of inflation and the Government subsequently took credit for bringing it down — even though they had pushed it up in the first place.

Mr. Golding: Is not my hon. Friend in danger of overlooking the increase in VAT to 15 per cent., which was so disastrous to employment, and the extension of the tax, which will be disastrous, to the catering industry?

Mr. Mitchell: I agree with my hon. Friend. That increase accelerated inflation to over 20 per cent.
The Chancellor told the Select Committee that the manufacturing sector must inevitably decline because we are an oil power. That is economic nonsense of the first order. There is no inevitable reason why manufacturing should decline just because we have oil. We could have expanded the economy and created a balance of payments problem to avoid the pressure of oil pushing up the exchange rate.

Mr. Hoyle: Does my hon. Friend agree that every other oil-producing country is investing its revenues in its industry, particularly manufacturing industry? We are the exception.

Mr. Mitchell: I agree. We are sending our money overseas at record rates to fuel the growth of our competitors. The Prime Minister tells us that we are providing for our future. She is really saying that we are providing for the future of some — those who get the returns on those investments—but we are not providing for the mass of the people.
It is as if ICI, which, thank heavens, is beginning to make profits again, decided to invest its profits in its direct competitors overseas. What folly that would be. Yet that is what we are doing as a nation—we are investing in the growth, jobs and future of the countries with which we compete directly. And we call that folly providing for our future. I have never heard such economic rubbish.

Mr. Bell: The Prime Minister boasted on television last night that £35 billion had left this country since 1979, but no one has told us the annual rate of return on that so-called foreign investment.

Mr. Mitchell: The direct question that must be asked is why that £35 billion has not been invested in this country, to provide jobs for our people and a future for our country. What is so wrong with Britain that its capitalists must rush to take their money overseas when they have a Government that shower tax concession after tax concession on them? Do they have no faith in the future that the Prime Minister promised them?

Mr. Robert Parry: Is my hon. Friend aware that British American Tobacco, which recently took over the Eagle Star Insurance Group for £936 million, promptly announced 1,100 job losses in Liverpool and 700 job losses in Southampton and yet it recently

declared massive profits of £971 million? The people up there to whom I am pointing in the Strangers' Gallery——

Mr. Deputy Speaker: Order. The hon. Gentleman cannot do that.

Mr. Parry: The jobs of the people up in the Strangers' Gallery, who are listening to this debate, are at stake in areas such as Manchester, Liverpool, Newcastle and Glasgow.

Mr. Mitchell: My hon. Friend the Member for Liverpool, Riverside (Mr. Parry) is rightly moved by the plight of his friends and constituents who are being thrown out of work by a callous multinational to which operations in Britain are peripheral. That is what is happening to the whole economy. The Treasury and Civil Service Select Committee heard Ford (UK) and Ford (Europe) say that if the pound remained over-valued—they estimated that it was over-valued by about 20 per cent.—they would not make new investment in Britain but would source cars from outside. That is exactly what is happening.
Perhaps the Prime Minister going around the world grovelling for investment in Britain, even if the investment is to come from fly-by-night operations that want a tax funk hole is the last vestige of British pride. If that is the essence of the Prime Minister's economic policy, she is preparing a future in which the jobs that such investment generates will be subject to the type of whim that my hon. Friend has just outlined. British people's destinies will not be controlled in Britain because the Government are abdicating their responsibility to develop, organise and expand the economy for the benefit of British people. The only real future lies in having a competitive exchange rate and low interest rates to stimulate investment by our firms, and our business men in this country so that we can manage our destiny for our benefit rather than for the profit of some multinational that will shed its interests at the first opportunity.

Mr. Hoyle: My hon. Friend is making a strong point about the decline of manufacturing industry. The Government are talking about service industries. How will service industries, such as fish and chip shops be helped by the introduction of VAT on take-away foods?

Mr. Mitchell: I shall deal with take-away foods slightly later in my speech. It is take-away rhetoric at the moment, but I shall deal with take-away food. The Chancellor seems to think that service industries can grow in a vacuum, but they cannot. There must be healthy manufacturing industry if they are to grow, but he has destroyed that healthy base. When the Chancellor says that the Bill will stimulate recovery, he is saying that, thanks to the destruction of jobs, capacity, employment, firms and the future we are now like a one-legged man who is taking his first few halting steps on the road to recovery. We are not leaner and fitter but leaner and weaker and we have had a leg amputated by what has happened in the past five years. Now that we are in that situation, the Chancellor prides himself on the glimmerings of a recovery. It is nothing like the recovery that has taken place from previous setbacks, and certainly nothing like the recovery that took place from 1931 to 1936.

Mr. Bell: Is it not a fact that the recovery to which my hon. Friend refers is essentially a United States recovery,


based upon the fact that it has a deficit of $20,000 million, and are we not simply following on from that recovery in the United States?

Mr. Mitchell: I think that that is the essence of the point. The Chancellor is telling us essentially that we are recovering because the United States, which is recovering by doing the exact opposite of what he told us was sound economic policy, is recovering at such a fast rate. In other words, crime pays in the United States, on the Chancellor's definition, and, like puritan pimps, we shall benefit from it, because that is what is happening. If the United States is engaging in deficit financing, because of its abandonment of money supply targets, its recovery will be at a fast rate. It has created 4 million jobs in the last year.

Mr. Golding: Why is my hon. Friend telling us the views of the Chancellor? Has not the Prime Minister said that he is too optimistic? Has not the Prime Minister said that the Chancellor does not know what he is talking about when it comes to unemployment? Would my hon. Friend relate his remarks to the size of unemployment and to the amount that we are spending on unemployment, £17 billion, at the same time that we are exporting capital? Would my hon. Friend deal with the organ grinder, and with the remarks of the Prime Minister, not her underling?

Mr. Mitchell: I am grateful to my hon. Friend. I shall certainly come to that point later. It is well worth developing.
Our recovery is very feeble and glimmering compared with the recovery in the 1930s, when another Conservative Government were in power. I do not think there ever was a recovery without an expansion of the credit base in the economy commensurate with the margin of idle resources in that economy. That margin of idle resources is enormous. There was a huge increase in domestic credit just before the last election by this so-virtuous Government, but it washed abroad in the form of increased imports. Thus we have been financing, thanks to that expansion of domestic credit, an increase in employment in competitor countries, mostly in the EEC, to whom we have already lost over 1 million jobs from this economy in the last ten years. We have had an expansion of credit without any payback in terms of employment and output. We now need a huge expansion of credit.
What happened from 1931 to 1937 is an important object lesson to us. That depression is commonly thought to have been worse than the present depression. It was not worse. This depression is much deeper, and has lasted far longer. The number of jobs lost in the Thatcherite depression is three times the earlier figure. The number of long-term unemployed in the Thatcherite depression is three times the level of long-term unemployment in the so-called great depression in this country. The labour force is now about one third higher, but the real problem before the war, as now, was that our export market collapsed, and there was a rapid increase in the labour force. Our export performance in the recovery was far better than our present export performance. Manufacturing output rose 58 per cent. between 1931 and 1937. It rose to 38 per cent. above the 1929 peak. In the decade since 1973, we have seen a decline in manufacturing, amounting to a fall of 16 per cent.
We have to go back to 1923 to find a year when industrial production was less than it is now, at the summit

of achievement of monetarism and Thatcherism in the economy. The engine of recovery in 1931–32 was the devaluation of 35 per cent. against the dollar and the gold bloc countries, plus a minimum tariff of 10 per cent. on imports and a policy of ultra-cheap money. From time to time enormous pressure was put on the Government to return to the gold standard, but it was always avoided. because the Government were then concerned about the effect on exports of devaluing sterling.

Mr. Craigen: My hon. Friend has mentioned the continuing decline in manufacturing capacity. As Ministers constantly talk about the importance of developing science-based industries, is it not essential to retain a strong manufacturing capacity, if only to sustain the future growth of such industries?

Mr. Mitchell: That is an extremely important point. The Chancellor seems totally contemptuous of manufacturing industry. Whenever he is asked about it, he says that it represents only 25 per cent. of the economy. However, it is the basic part of the economy, and everything else rests on it. As manufacturing industry runs down, and as we turn over more and more of our car market to the EEC, more and more of our domestic appliance market to the Italians and more and more of our hi-fi market to the Japanese, we need less steel, so the steel industry winds down, we need less coal, and the whole economy becomes locked into a spiral of decline.
Recovery will not come from a few computer-based interests, even if Sir Clive Sinclair is cloned. Indeed, even if he is trebled, there will not be any recovery, because there is no manufacturing base on which to rest that sector.

Mr. Stuart Holland: Having mentioned Sir Clive Sinclair, I am sure that my hon. Friend would like to remind the House that, although Sir Clive has been knighted and lauded by Conservative Members and hailed as evidence of a new flourishing entrepreneurship, he would not be in business now if it were not for the National Enterprise Board.

Mr. Mitchell: I agree, Sir Clive has been knighted by the Government who benighted the enterprise board. The Government go in for a strange form of justice.
It is important to find out how we recovered from a depression in the 1930s that was not as bad as this one. The essence of that recovery was devaluation plus cheap money. The bank rate was forced down from 6 per cent. in February 1932 to 2 per cent. in June. It was cheap money, and the pumping out of money to lower interest rates, that brought about the recovery of the 1930s.
In January 1934, the London and Cambridge Economic Service said that the money figures showed that
the cheap money policy of expanding the cash base of the banking system"—
that is what the Government were doing—
is still being vigorously pursued. Whether the object is to facilitate Government or industrial borrowing or to assist in depressing the value of sterling it is impossible to say.
But it did not matter, because both those things were virtuous purposes: expanding Government borrowing to stimulate the economy and bringing down the exchange rate at the same time.
That was the fuel of expansion in the 1930s, and those are the weapons that the Government are eschewing as if they were the harbingers of disaster. The economy will not recover, however, until the Government turn to those same


weapons of devaluation, cheap money and an expansion of the monetary base to cope with the rise in unemployment. We should bring about recovery by the same techniques as were used in the 1930s. It was a Conservative Government that did that then, but they had some concept of the impact of unemployment and the misery that it generated in the nation.
This Government have no such concept. Ministers sit in their remote little south of England fastnesses, content and complacent. while the country suffers and slowly declines, and they call that improvement. The Prime Minister tells us that she is making the country strong, yet she is destroying the industrial base—the very thing that allowed us to fight the 1939 war, and to build the tanks, aeroplanes and armaments. What sort of conflict could we face—if we had to—on the present shrunken industrial base, with our shipbuilding capacity semi-destroyed, with the steel industry run down, and with a coal industry that is being closed down? How can the Prime Minister call that strength? The recovery of the 1930s was an example to the Government.
It is important to remember that the stance is still contractionary, if one allows for unemployment. There is no Keynesian reflation, because once one allows for the cost of unemployment and deficit financing or counter-cyclical spending is not involved in that, but essential social security spending — a social obligation. In that respect there is no expansionary stance and there can be no recovery.
The quarterly review by Butler Till, Ltd. written by David T. Llewellyn, once an adviser to the Treasury, says that the Government are borrowing far less than any of our competitor economies which are expanding more rapidly than we are. In 1983 in the United States, the federal deficit widened by 75 per cent., with no increase in interest rates, yet the Government say that they dare not increase the PSBR because that would put up interest rates. What nonsense.

Mr. Bell: Can my hon. Friend explain the Chancellor's figure of 2·5 per cent. in relation to the PSBR next year? Does my hon. Friend agree that the Chancellor has plucked the figure out of his head and has reduced the amount that he should be borrowing if he wants any expansion in our economy?

Mr. Mitchell: I am tempted by my hon. Friend. The Chancellor has trussed himself up like a turkey. Like one of those poor sex victims found tied up and naked who get sexual pleasure out of their own binding, he takes pleasure in being bound by in the medium-term financial strategy and by targets which are unattainable and which strangle the economy. All that the Chancellor can do is to manipulate within the tight targets which he has imposed in a monetarist witchcraft. What we need to get out of this disaster is a massive expansion of the money supply and a consequent devaluation of the pound sterling to make our industries competitive in the world market.
I turn my attention now to the basic measures in the Finance Bill — this important measure. It is right to allow this full debate, because it is the longest Finance Bill in recent years. The Standing Orders presuppose, by exempting the Bill from the 10 o'clock rule, that a debate of more than six hours will be allowed.

Mr. Deputy Speaker: Order. The hon. Member should address himself to the debate and leave the chairing of the meeting to me.

Mr. Mitchell: I am grateful. I did not mean to dictate.

Mr. Deputy Speaker: There may be many seats in the Chamber, but there is only one Chair.

Mr. Mitchell: I am grateful to you, Mr. Deputy Speaker, for increasing the limits of my numeracy.
I shall deal first with one of the Bill's major inadequacies—the failure to do anything serious about one of the most pressing social problems, the poverty trap.

Mr. Golding: Will my hon. Friend do the decent thing and start at clause 1 and go through the Bill clause by clause, as I intend to do later?

Mr. Mitchell: I intend to make a short speech. I have no desire to impose upon the House. My hon. Friend may wish to encourage me, but I want to concentrate on some of the Bill's main provisions in so far as they affect my constituents. In Grimsby, as in the nation, poverty is a problem. The Government who have created 4 million unemployed and pushed 7 million people below the poverty line, should have had the decency to tackle the poverty trap.
In a brilliant speech, my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) dealt with the intolerable marginal rates. This is the first time that the child benefit increase has been missed out of the Budget. That is a contradiction of the policies that the Conservative party put forward during that deceitful 1979 election, when they deceived the people into voting for them. When in opposition, Conservative Front Bench spokesmen underlined their party's commitment to treat increases in child benefit in the same way as reductions in taxation. They said that the aim was to secure an improvement in the real value of child benefit as part of an overall reduction in the burden of direct taxation. They issued a press notice to that effect in July 1977.
Indeed, Conservative women recommended to the Chancellor that child benefit be increased in line with any increase in tax allowances — but they were not. The failure to do so means that the Government will not bring help to those most immediately in need—the poor with large families. It is a criminal abdication of responsibility. The likely increase of 35p is a weapon that should have been in the forefront of the armoury to deal with poverty.
A 12 per cent. increase in tax allowances requires a child benefit increase of 95p, rather than the 35p assumed in the Treasury tables. With any sense, it should have been possible to increase child benefit by 130 per cent. if the benefit was made taxable. Money would then be clawed back from those who need it least. The actual cost of a 130 per cent. increase would be only £2·5 billion on a taxed basis.
The Chancellor said that the tax thresholds were necessary to tackle poverty, but he also said that there was no quick or cheap solution to the problem. He then plumped for what is the most expensive solution—an increase in tax allowances. Raising tax thresholds is an expensive way of dealing with the problem of poverty, because it fails to target the help directly to families who are the chief victims of the poverty trap.
The report of the Treasury and Civil Service Sub-Committee said that it was disappointing that expensive


reforms did not achieve more to reduce the problems. The difficulty of the increased tax threshold is that it is not closely enough focused on the groups that must be helped if we are to resolve the poverty and unemployment traps. Last year, of the 800,000 tax units freed from tax by the increase in personal allowances, only one in 10 had children. Help should be concentrated on those who need it most. Not to do so is a major abdication. Only one in 10 of those people were in the poverty trap.
The second abdication of the Finance Bill is on national insurance contributions. I praise the Government for their action on the national insurance surcharge—late though it is. It is national insurance contributions which have increased the tax burden on the mass of the people. The income tax burden had been reduced before the Budget by about £1·2 billion, but the burden of national insurance contributions has been increased by about £3·4 billion. That is why tax is pressing more heavily upon the people. National insurance contributions have to be viewed as a form of taxation and everyone who is earning less than £20,000 a year is feeling their effect. The national insurance rate has been increased from 5·5 per cent. under a Labour Government to its present rate of 9 per cent. It is a regressive tax on the mass of the people. It is the Government's version of redistribution—taking from the poor to give the rich.
There is a huge gap between the figure at which national insurance contributions begin to be paid, which is £1,768 a year, and the sum of £3,155, which is when tax begins to be paid by a married couple. Many working women in Grimsby feel that national insurance contributions are a form of direct taxation on them, as indeed they are. The gap between the two forms of taxation has increased and national insurance contributions are pressing more heavily on the incomes of the less well-off. It would be far better to have a social security tax, which could begin at the same threshold as that which is used for current taxation and need not have an upper limit. Employers would pay the tax in respect of all employees. That would be a far fairer way of raising the money for national insurance and social security funding than the present regressive taxation, which has been a major cause of the shift in the burden of taxation towards the less well off sections of society.
I move on to the imposition of VAT on take-away food. This is a major area of debate, for the Government's proposals will have a direct bearing on the area of society that is represented by my right hon. and hon. Friends and me. We represent those who eat take-away food. In general, we do not represent those who enjoy expense account lunches and dinners at the expense of others, including that of the taxpayer. We represent those whose standard of living is such that they have to depend basically on take-away food, which is now unnecessarily and viciously to be taxed.
A brake is to be put on the phenomenal growth of the take-away food industry. I think that the Chancellor of the Exchequer has been mesmerised by the growth of the McDonald's of this vintage. However, a form of basic provision is that of fish and chips, which working people eat in the industrial cities. The Government's proposals are a blow to that industry and to the employment prospects within it. We see a threat to its further expansion which could create as many jobs as Nissan will bring us. That growth is threatened by the taxation of take-away food.

Mr. Parry: Does my hon. Friend agree that the imposition of VAT on fish and chips and other take-away meals will have a tremendous effect on those who live in inner-city areas, especially pensioners, who in many instances rely on take-away food for their only hot meal of the day? It will have an equally great effect on those with low incomes, including one-parent families

Mr. Mitchell: I agree with my hon. Friend that the Government propose to introduce a tax on those who are least able to afford it. It will be a tax on the small businesses that the Government want to encourage. Fish and chip businesses have been struggling for years. The number of closures of fish friers has been increasing over the years as costs have risen. Last year, a bag of spuds cost £2·80. That was the price paid by a fish and chip shop. The price will rise to £8 this year. The cost of the corn oil was £10·50 and it is now £24.
In addition, these struggling small businesses are being faced with this iniquitous proposal to tax them at 15 per cent., which is causing the sort of outcry and lobbying that we witnessed today, and we get only an echo of it in here in London. The kind of fish and chip take-away that is so basic in the north and in industrial cities is less important in the south, and it is of no importance whatever to well-fed Conservative Members.

Mr. Harry Cohen: Will my hon. Friend confirm that small fish and chip shops will have a big problem in trying to separate the items on which VAT is and is not paid? I have not yet received an answer to an earlier question I asked about a chip butty made with cold bread and hot chips.

Mr. Mitchell: Considering all the financial theology over which the Chancellor puzzled— whether to have little MO, PSL2, M3 or M1 for his sacred religion of monetarism—the paramount question of the VAT rate on a chip buttie must be among the most difficult. Perhaps when he replies the Minister will deal with that basic but philosophical question. [Interruption.]

Mr. Golding: Perhaps we shall see the introduction of a new type of butty, with hot bread outside and cold chips inside, so avoiding VAT. I hope that my hon. Friend will not hurry the section of his contribution with which he is now dealing. There is so much noise coming from the Government Front Bench that if the occupants were on a picket line outside Silverdale colliery, they would have been locked up by now.
Before leaving the VAT issue, will my hon. Friend deal with the plight of schoolchildren who, having been priced out of school dinners, are now being priced out of the chippie by the occupants of the Treasury Bench, who have never known what it is not to have enough to eat? Will my hon. Friend stop being soft on the Government Front Bench?

Mr. Mitchell: I agree with my hon. Friend. School kids have been forced by the escalating price of school dinners to go outside schools, at some danger to themselves, and about the town getting take-away food. That food is now being priced out of reach of their pockets, because the money available to them is not increasing at the rate of that available to Conservative Members.
I represent an area, if not a generation, which was brought up on fish and chips as a basic food. It made me what I am today — gross and overweight, though


essentially healthy—and I recall how the Government told people during the war to eat more fish and chips. It was good for the national morale and for the national diet and it saved the importation of food at the expense of ships that were being sunk by submarines. yet this pathetic Government claim that their economic miracles are conditional on the 15 per cent. taxation of fish and chips.
I am reminded of the early days of a newly formed television company, which shall be nameless for the time being, in Yorkshire, when the hon. Member for Thanet, South (Mr. Aitken), as its star reporter, did a spot of ethnic sociology among the natives by taking a film crew to Harry Ramsden's with Colonel Sammy Lohan, the "good food spy," to taste the delights that the working class of Yorkshire had been eating for generations.
The film crew rolled up and set up at Harry Ramsden's. Colonel Sammy Lohan began to eat his fish and chips and professed that they were delicious. "What," piped up the hon. Member for Thanet, South "shall we drink with the fish and chips?" Colonel Sammy Lohan replied, "We need something very dry to cut through the grease. Waitress, we will have a dry white snurple-turple 1950 durple." "Nay," said the waitress, "we serve nowt but tea here. Tha'd best go somewhere else for that." That is the extent of the knowledge of Conservative Members of the fish and chip trade.
Joking aside, take-aways are ethnic as well as small businesses. A large proportion are run by Indians, Chinese and Yorkshire people—all ethnic minorities, who are maintaining their traditional tribal cooking and ethnic dishes to the best of their ability. Those struggling sections of our community, who are trying to maintain that trade, will be hit by the 15 per cent. VAT on fish and chips. That levy is unnecessary.

Mr. Maxton: My hon. Friend has not mentioned the baker's shop that sells hot pies and hot soup to take away. I am not sure of the tax to be imposed on those foods. I have heard that they will be exempt. If so, that will put the fish and chip shops into even more difficulties because the bakers will provide competition by cheaper goods.

Mr. Mitchell: I am grateful to my hon. Friend for raising that issue, because a number of serious anomalies arise. I have put a number of questions on that matter to the Treasury and have not received satisfactory answers.
My hon. Friend the Member for Liverpool, Riverside (Mr. Parry) made the important point that the 15 per cent. VAT charge will hit the unemployed, families with small children, low income families, students and pensioners —people in the midlands, the north and Scotland. The people in those areas depend on fish and chips. They cannot afford sit-down meals. The cost of the average take-away meal is £1·50 or less. It is not the 20 or 30 quid job that is standard for Conservative Members' lunches on expense accounts and SDP Members' lunches on Barclaycard.
One third of take-aways are owned and run by ethnic minorities. The direct taxation is a setback to their efforts to establish themselves in this country and provide a diversity of culinary experience for working-class people.

Mr. Eric Deakins: Does my hon. Friend believe that ethnic take-aways are a contribution to a multicultural society, to which Opposition Members are

dedicated? Will he consider when he has finished dealing with fish and chips and the working class, whether the Government believe what they say about backing small business?

Mr. Mitchell: That is a typical approach by the Government. It is a matter of linguistics—"Don't watch what I am doing, listen to what I am saying. I am saying that I am encouraging small businesses while small businesses are going bankrupt." That is another blow to small businesses, many of which are struggling financially. I accept my hon. Friend's point. The new diversity in culinary experience—the switch in the north from fish and chips to Chinese take-aways and Indian takeaways—is welcome. It enriches our experience. It is a treat to have many of those meals. All those take-aways are part of the diet of the working class and the less well-off.

Mr. Bill Michie: Is it part of the vicious circle that the Government have stopped local authorities building houses for the working-class young, who have been deprived of a job, so that they are pushed into cheap bedsits and can eat only by using take-aways? Now the take-aways are being attacked.

Mr. Mitchell: That is right. Increasing misery is being imposed on the less well-off in society. The Government are imposing all the benefits of depression, which they have engendered, on the unemployed, the poor, social services beneficiaries, those in the poverty trap and those with large families. Those are the people who turn to takeaway food. They are now being asked to pay a 15 per cent. tax. That is adding culinary insult to economic injury in a way that only the Government, with their callous indifference and lack of knowledge of how people live, feel or eat, could do. Only a Government as remote from the people as this one could have gone in for that completely unnecessary and stupid act. Why is it necessary at this stage? Is it so essential for economic recovery that the Government must impose that tax on the people?

Mr. Bell: My hon. Friend mentioned take-away food, expense accounts and big lunches and said that members of the SDP might use a certain type of credit card. Is he aware that not one member of the SDP has sought to speak or is present in the Chamber? Does that not reflect their interest in matters of finance?

Mr. Mitchell: I am grateful to my hon. Friend for having made that point, because when I was a lad fish and chips were 5d for a fish and twopence-halfpenny for a cake. That was a cake in Yorkshire; not a cake in the rest of the country. It was not that measly, ground-up stuff. It was fish between two layers of potato done in batter. Chips were a penny and one could have double chips for twopence. They were delicious. If the Government have their way, we shall have to have the credit cards used by the SDP to buy the fish and chips which are basic food for our people.
It is no surprise that only one member of the alliance is present. That is par for the course from their performance in the Finance Bill Committee. I know that the hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood) was full of protestations about what he would do in Committee, but he will not wait if the business comes on after ten o'clock. He will be home in bed, as members


of the alliance usually are when the Finance Bill is in Committee. They are always bleating in the papers. There is no problem that cannot be made worse by the right hon. Member for Plymouth, Devonport (Dr. Owen). A great deal is said in the papers, but not in the House and certainly not at all in the Finance Bill Committee.
It is clear from what has leaked out already that the most amazing, incomprehensible anomalies will develop in this basic trade.
I have the notice by the commissioners——

Mr. Roland Boyes: Mr. Deputy Speaker, this is an important speech — [Interruption.]

Mr. Deputy Speaker: Order. What does the hon. Member want?

Mr. Boyes: I am having discussions with my legal adviser, Mr. Deputy Speaker, on the correct procedure, because I have a problem. [Laughter.] This is an important speech. In fact, it is one of the most important that I have heard.

Mr. Deputy Speaker: Order. Is the hon. Member raising a point of order or seeking to address the House?

Mr. Boyes: I have now decided to change from an intervention to a point of order. [Laughter.] This is an important speech and I am trying to follow it. The argument is becoming a little technical and difficult, so I will ask you to ask the speaker to slow down a little so that we can——

Mr. Deputy Speaker: Order. The hon. Gentleman knows that that is not a point of order.

Mr. Mitchell: Mr. Deputy Speaker, I apologise to you and the House if, in my haste to get through my poor remarks, I am speaking a little too fast for the comprehension of the House. I shall try to observe my hon. Friend's point, but I take it amiss that, when I am dealing with a subject which is important for our people's way of life, hon. Members have no higher sense of social purpose than to laugh like hyenas and the public school hooligans that so many of them are. The way of life in our communities, and take-away food, may not be important to them, but previous Governments have had some sense of social commitment. Even if this Government do not have such a commitment, they should at least listen to important speeches like this.
I turn now to the——

Mr. Peter Pike: In regard to the importance of the point that my hon. Friend has been making about tax on take-away food, on which my hon. Friends are all agreed, will he, before he leaves the subject of VAT, deal with the VAT on building alterations, in addition to the problems caused by cuts in grants, in view of the number of unemployed building workers?

Mr. Mitchell: I do not think that many extensions to fish and chip shops will be built over the next few years. If they were, the proprietors would feel a double sense of aggravation because of the actions of the Government. This kind of legislation, which is easily thought of by a bright Chancellor, dewy-eyed and bushy-tailed, wanting to make an impression, is difficult and complicated to administer, as this notice from the Commissioners of Customs and Excise on value added tax on hot food and drink indicates. It shows the kind of anomalies which will

arise. On page 2 "hot" food is defined as "above room temperature." Room temperature in a sweltering chippie in the middle of a tropical Sowerby Bridge summer or in Grimsby when the sun shines is very different from room temperature in the winter. It continues:
Certain freshly cooked food which is customarily consumed cold, such as a loaf of bread, may be zero-rated even if you sell it before it has had a chance to cool down.
So one does not have to wait for the bread to cool. It goes on:
Where a supply of hot food includes an essential ingredient which is cold, such as the bread roll enclosing a hot dog or hamburger, you should treat the whole supply as liable at the standard rate.
Does that include chip butties? If it includes chip butties, does it include sausage rolls? There is no definition of a hot sausage roll in this document.
The document goes on:
The incidental provision of cold items which are not separately charged for, such as a dollop of mustard, tomato sauce or chutney, should be ignored.
That is progress. We can ignore chutney and tomato sauce. What a liberalisation of procedures the Government have given us.
Here are some examples of food which attract standard rate of VAT if they are sold hot:
Fish and chips, chicken and chips, pie and chips, etc., chips sold on their own;"—
There is no definition of a chip butties but chips sold on their own cannot be zero-rated—
Chinese, Indian, Greek, Italian and similar take away meals and dishes;—
there is nothing about ethnic Yorkshire pudding—
hot dogs and hamburgers, pies and pasties, toased sandwiches, cups of tea, coffee, chocolate, etc; cups of soup:"—
there is nothing about bowls of soup—
roasted chesnuts.
Here are some examples of food which may be zero-rated unless they are sold—

Mr. Bell: Is there any reference to black puddings? This came up earlier and a Minister of the Crown said that black pudding was eaten cold, which showed the ignorance of certain Ministers of the Crown about the eating habits in the north-east and possibly in Scotland. Is black pudding mentioned in the list which my hon. Friend has?

Mr. Mitchell: There is no mention of black pudding, but the point my hon. Friend refers to shows how out of touch Government Members can be. The junior Minister at the Department of Health and Social Security actually went on television in the north and said in most fish and chip shops the food was eaten on the premises, which shows how much he knows about fish and chips.

Mr. Corbyn: I have been following very closely my hon. Friend's arguments about the VAT payments on take-away food. There seems to be a misapprehension in the House that the majority of take-away restaurants are fish and chip shops, whereas in my constituency that is not the case. They are kebab and tandoori take-aways. It is on this point that I should like my hon. Friend to help me. Can he tell me whether or not a doner kebab would be zero-rated as against a shish kebab because a doner kebab often has a cold outside pastry, although sometimes it is lightly toasted? Can he help on this point?

Mr. Mitchell: I only wish I could; I would be eager to do so. I hope that the Minister, in his concluding


remarks, will tell us what the trade can expect, because the proposal is causing much anxiety in a trade that is at present having a difficult time.

Mr. Boyes: Will my hon. Friend tell the House whether the document to which he has referred says anything about the very important meals-on-wheels services that are run for elderly people? Some of us are very concerned that those services might be VAT-rated. People might think that that is a ridiculous idea, but in view of the calibre of Conservative Ministers it would not surprise me if they decided to VAT-rate the meals-on-wheels services, because they could come under the definition of a take-away meal service.

Mr. Mitchell: It does not say—

The Parliamentary Secretary to the Treasury (Mr. John Wakeham): rose in his place and claimed to move, That the Question be now put.

Question put, That the Question be now put:—

The House proceeded to a Division:

Mr. Allan Roberts (seated and covered): On a point of order, Mr. Speaker. The point of order concerns the moving of the closure on the Second Reading of a Finance Bill, in the light of what is said in "Erskine May" at page 837:
Debate on main stages
Second reading
Debate and amendment on the second and third reading of bills introduced on Ways and Means resolutions are governed by the ordinary rules of relevancy. On the second reading of the Finance Bill, however, a general review of national finance is normally permitted.
There has not been a motion for the closure of a debate on the Second Reading of a Finance Bill since 1925, when the closure was moved——

Mr. Deputy Speaker: Order. I have to tell the hon. Gentleman that the question of the acceptance of a closure motion is in the absolute discretion of the occupant of the Chair, and that cannot be challenged.

Mr. Roberts: While accepting that, Mr. Deputy Speaker, may I add that the closure was moved by Mr. Winston Churchill on 25 May 1925 and was opposed by the then Captain Wedgwood Benn. It resulted three days later on 28 May—this is what I want to avoid, while accepting your ruling—in a motion of censure against the Chair for accepting the closure. There was a major day's debate on it. That is the precedent that the Government are now——

Mr. Deputy Speaker: Order. The House can be reassured by the fact that what we are doing now is not unprecedented. But I must repeat that the acceptance of a closure motion is a matter for the absolute discretion of the Chair and cannot be challenged.

Mr. Bennett (seated and covered): On a point of order, Mr. Deputy Speaker. May I draw your attention to the Standing Orders of the House, which make it absolutely clear——

Mr. Deputy Speaker: Order. The Question is, That the Question be now put. As many as are of that opinion say "Aye" [HON. MEMBERS: "Aye".] To the contrary

"No". [HON. MEMBERS: "No".]
Tellers for the Ayes, Mr. David Hunt and Mr. Ian Lang. Tellers for the Noes, Mr. Norman Hogg and Mr. Allan McKay.
Now I will take the point of order. Mr. Andrew Bennett.

Mr. Bennett (seated and covered): On a point of order, Mr. Deputy Speaker. May I draw your attention to the Standing Orders of the House, which make it clear that on the Second Reading of the Finance Bill the House expects the debate to run for at least six and a half hours, because there is no requirement in the Standing Orders for the 10 o'clock rule to apply. If the debate is expected to last for at least six and a half hours, it would then be reasonable for the Chair to accept speeches from the Front Bench spokesmen in reply to the debate before a Closure motion is accepted.
For the Chair to rule that it is entitled to accept a Closure motion at any time is perfectly reasonable, provided that it does not contravene the Standing Orders of the House, which make it clear that on the Finance Bill we are entitled to more than the normal six and a half hours of a Second Reading debate. Therefore, I respectfully ask you to reconsider your decision to accept the Closure motion when the Front Bench spokesmen have not had an opportunity to reply to the debate. It is clear that the House has the right to have its Standing Orders adhered to.

Mr. Deputy Speaker: Order. I must draw to the hon. Gentleman's attention the fact that the House has been debating the Second Reading for seven hours. It is for the House to decide whether it wishes to continue the debate——

Mr. Maxton (seated and covered): On a point or order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. I am dealing with one point of order at a time. It is for the House to decide now whether it wishes the debate to continue, and its will is being expressed in the Lobbies. The Tellers must take up their positions.

Mr. Maxton (seated and covered): On a point of order, Mr. Deputy Speaker. Although I do not challenge your right to rule on the Closure motion, I challenge the constitutional right of a member of Her Majesty's Household to move that motion. A basic constitutional right of the House is that the Monarchy should not interfere in its tax-raising powers. For a member of the Queen's Household to move that motion is an interference in the constitutional rights of the House——

Mr. Deputy Speaker: Order. Nothing in the Standing Orders prevents any member of the Government from moving such a motion.

Mr. Bell (seated and covered): On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order. Before I take a further point of order, I remind the House that the Tellers must be in their positions.

Mr. Bell (seated and covered): On a point of order, Mr. Deputy Speaker. Although I do not wish to challenge your ruling, I wish to say that the traditional role of our legislature has suffered badly from the growth of Government during the past quarter of a century. It was my understanding that the Government would seek to make Parliament effective,


in its job of controlling the Executive.
Those words come from the Conservative manifesto of 1979——

Mr. Deputy Speaker: Order. The hon. Gentleman sought to address the House on a point of order. What is it?

Mr. Bell (seated and covered): My point of order is that the legislature as a whole has suffered badly tonight at the hands of the Executive.

Mr. Deputy Speaker: That is an opinion, not a point of order.

Mr. Hoyle (seated and covered): On a point of order, Mr. Deputy Speaker. Although I do not in any way challenge your ruling, since this sort of thing has not happened in debates on Finance Bills since 1925 would you consider whether there is a constitutional point here as to why it should happen now? Is it not because the Government wish to steamroller their legislation through the House?

Mr. Deputy Speaker: It is not unusual in this place to do things on ancient precedents. I am glad that the hon. Gentleman reminds the House that this is not unprecedented.

Mr. Gerald Bermingham(seated and covered): On a point of order, Mr. Deputy Speaker. Is it not a fact that your calling for Tellers to be appointed while points of order are being taken is a denial of the right of the House to raise matters of constitutional importance——

Mr. Deputy Speaker: Order. Hon. Members should know sufficiently well that Mr. Speaker or the occupant of the Chair cannot take a point of order while the Question is being put. I have dealt with the points of order that were raised subsequently.

Mr. Bermingham (seated and covered): Further to that point of order, Mr. Deputy Speaker. Is it not the right of any Member of the House to raise a point of order at any time? Has it not been traditional for a number of centuries that in the event of a vote being called a Member has the right, from a sedentary position, to raise a point of order, and is it not in the interests of the House that that point of order be taken at the appropriate time—that is to say, now?

Mr. Deputy Speaker: I may have misunderstood the hon. Gentleman. I thought that he was challenging my decision to put the Question at a moment when some hon. Members were on their feet. If that is not so, I apologise to the hon. Gentleman and ask him what his point of order is now.

Mr. Bermingham (seated and covered): My point of order is very simple. There comes a point in time when a Member of Parliament has the right to have his say on the matter of raising taxation. A Member of Her Majesty's Government who holds office under the Crown has moved the closure, thus denying many of us the right to raise points about the raising of taxes in this Second Reading debate on the Finance Bill. Accordingly, many of us feel that we have been denied our rights as Members of the House to express our views. Accordingly, I ask that the vote should not be taken.

Mr. Deputy Speaker: I understand the hon. Gentleman's resentment, but the point that he raises is not

a point of order. I repeat again that it is a matter for the absolute discretion of the occupant of the Chair whether to accept a closure motion.
Lock the doors!

Ms. Clare Short(seated and covered): On a point of order, Mr. Deputy Speaker——

Mr. Deputy Speaker: Order. The hon. Lady does not need to wear a hat. That is known as discrimination, I believe.

Ms. Short: Many of us have waited a long time to raise points on the Finance Bill today. We put in our names to Mr. Speaker a considerable time ago and there are points that we wish to raise which have not been raised at all in the discussion so far—in particular, the non-payment of the long-term rate of supplementary benefit to the long-term unemployed. There seems to be an important question as to whether you are penalising some hon. Members because others have spoken for a very long time. As it is the duty of the Chair to protect the interests of all hon. Members, it seems to me that that might be an unfair ruling.

Mr. Deputy Speaker: I repeat once again that at this moment the decision as to whether the debate should continue is not in my hands but in the hands of the House. It is for Members themselves to decide by their votes in the Lobbies whether the debate should continue. I merely give the House the opportunity to make that decision.

Mr. Bermingham (seated and covered): On a point of order, Mr. Deputy Speaker. On behalf of myself and many other Opposition Members, I wish to raise a very serious point of order. I note that the doors are now locked. Having sought to raise certain constitutional matters, I and many of my colleagues are now denied the right to register our protest.
Accordingly, on behalf of Members of the House, I call your attention to the absolute right, going back not just to Magna Carta—[HON. MEMBERS: "Further! Further!"] I cannot apologise too profusely, Mr. Deputy Speaker, on behalf of the ignorant who lie beneath me and who have little or no respect for democracy or the rights of my constituents and those of my colleagues who are now denied the right to vote, the officials of the House having sought to bar our right of entry into the Lobby because we have sought to stand upon our constitutional rights to protect the rights of our constituents and to challenge the rulings that have been made.
Is it not an abuse of the rights of a Member of Parliament if, because he seeks to use the procedures of the House to protect his rights, he is denied the right to vote——

Mr. Deputy Speaker: Order. The hon. Gentleman has made his point. I must remind him that it is not I but the Standing Orders that determine the period that shall elapse before the doors are locked. I am entitled to remind the hon. Gentleman that on, I think, two occasions I reminded the House that the Division was taking place.

Mr. Hoyle (seated and covered): On a point of order, Mr. Deputy Speaker. While in no way wishing to challenge your ruling, nevertheless I am sure that as a good democrat you must be concerned that many hon. Members have been denied the right to vote on the question of the closure. I should like your ruling on that. After all, we


were exercising our democratic right to say why the closure should not be moved. Now we shall even be denied the right to vote on it and our constituents will be watching this most carefully.

Mr. Deputy Speaker: I am not quite sure what the hon. Gentleman meant by his latter remark. I say again that the House had ample opportunity to get into the Lobby in the time that is laid down in the Standing Orders.

Mr. Bell (seated and covered): On a point of order, Mr. Deputy Speaker. While in no way seeking to challenge your ruling, may I say on a point of order that it is a matter of great concern to our constituents that we have not been able to vote in this important Division on an important Finance Bill?

Mr. Deputy Speaker: The hon. Gentleman started by saying that he would not challenge my ruling and then proceeded to do precisely that. I have ruled on the matter.

Mr. Bermingham (seated and covered): On a point of order, Mr. Deputy Speaker. While not wishing to challenge your ruling or in any way to show discourtesy to the House, I should like you, Mr. Deputy Speaker, to advise new hon. Members as to how we can proceed to the Division Lobbies while exercising our constitutional right to challenge the ruling of the House on a point of order? If I recall the position correctly, the challenges began, as far as I was concerned, at a moment of time when you were seeking to call the second ayes and noes—if I may put it that way—and the Tellers had been put in their place. If an hon. Member wishes to exercise his democratic rights, perhaps somebody could at some stage explain how they can be exercised by an hon. Member while remaining in a sedentary position which is necessary during a vote and how he can proceed through the Lobbies while, exercising his right to challenge——

Mr. Deputy Speaker: The hon. Gentleman is doing the same as the hon. Member for Middlesbrough (Mr. Bell). He starts by saying that he is not challenging my ruling and then proceeds to challenge a ruling that I gave earlier. I have ruled.

Mr. Bell (seated and covered): On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: I shall take the point of order in a moment. I understand that there is some difficulty and delay in the Lobby. Will the Serjeant at Arms inquire into what is delaying progress in the Lobby?

Mr. Bell (seated and covered): On a point of order, Mr. Deputy Speaker. [Interruption.]

Mr. Deputy Speaker: Order. I am trying to listen to a point of order.

Mr. Bell (seated and covered): While in no way wishing to challenge your ruling, Mr. Deputy Speaker, will you give advice to those hon. Members who have sat patiently all evening wishing to make an intervention with a view to being a member of the Finance Bill Committee? What advice must we now give to our Whips office in the event of our wishing to be on that Committee?

Mr. Deputy Speaker: I am sure that the hon. Gentleman knows his way to his Whips' office and knows how to put in a bid for a Standing Committee, if that is

what is concerning him. Membership of Standing Committees is not a matter for me at all. As to the hon. Gentleman wishing to address the House on the Finance Bill, I am bound to point out to him that frustration on the part of would-be speech makers is a part of life here.

Mr. Winnick (seated and covered): On a point of order, Mr. Deputy Speaker. As the Government are trying to deny the House the opportunity to debate the Finance Bill, which is our most important job as regards tax and Inland Revenue matters, I suggest that Mr. Speaker should be asked to come to the House.
I mean no disrespect to you, Mr. Deputy Speaker, but, as my hon. Friends have pointed out, no such closure motion has been moved since 1925 and I respectfully urge that Mr. Speaker be asked to hear our points of order.

Mr. Deputy Speaker: I do not think that it is necessary to rouse Mr. Speaker from his slumbers. The House is quite capable of handling the situation itself.

Mr. Winnick (seated and covered): On a point of order, Mr. Deputy Speaker. I mean no disrespect to you, but will you accept my suggestion that a deputation of hon. Members should now go to Mr. Speaker in his residence to explain the situation to him and to express our strong belief that, on the basis of a ministerial motion, we are being denied our right to vote? On such a serious issue, Mr. Speaker's presence should be requested, and we should go to see him before any further progress is made.

Mr. Deputy Speaker: That is not a point of order. I have ruled on that matter and I see no reason to vary my ruling.

Mr. Hoyle (seated and covered): On a point of order, Mr. Deputy Speaker. I do not wish to challenge your ruling, but do you accept that aggrieved hon. Members who have not been able to cast their votes should go to see Mr. Speaker, because they have been denied the opportunity to vote on the taxes that will be levied on their constituents? I feel that we should be allowed to go to Mr. Speaker. We should be allowed to vote, because our constituents will expect that of us.

Mr. Deputy Speaker: Any hon. Member who was in the House when the Division was called has only himself to blame if he failed to get into the Lobbies. The procedure on this Division has been no different from that on all the Divisions in which the hon. Gentleman has participated in all his years in the House.

Mr. Bell (seated and covered): On a point of order, Mr. Deputy Speaker. I do not wish to challenge any of your rulings, but in the light of your discussion with the Serjeant at Arms, will you reconsider your decision on the question of our voting on such a vital matter as the Finance Bill?

Mr. Deputy Speaker: Order. The discussions that I have had with the Serjeant at Arms have nothing whatever to do with points of order and the matters that have been discussed so far.

Mr. Bermingham: On a point of order, Mr. Deputy Speaker. While not in any way wishing to challenge your rulings and appreciating the difficulties in which you find yourself, perhaps it could be explained to the House how hon. Members, if they are to be courteous to the House —that is to say if they are to listen to your reply to points of order and consider the points that arise from it


—can do that and cast a vote. I cannot understand how an hon. Member can exercise his constitutional right to make those representations and at the same time proceed through the Division Lobby. The holder of the Chair is historically an important part of the House and is said to be the protector of our rights in regard to the Executive. If that is to continue and if we are to advance our arguments and do you the courtesy of listening to your reply, there is surely no way in which we can be here and in the Division Lobby at the same time. Mr. Deputy Speaker——

Mr. Deputy Speaker: Order. I have ruled on that matter more than once. I must point out to the hon. Gentleman that it is not unique for hon. Members to raise a point of order during a Division and to cast a vote. Moreover, if every time an hon. Member tried to raise a point of order during a Division the Division had to be delayed to allow him to cast a vote, we should never get through any Divisions.

Mr. Winnick: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Will the Tellers take their places?

Mr. Winnick: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Will the Tellers take their places?

Mr. Winnick: On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: Order, order.

The House having divided: Ayes 220, Noes 108.

Division No. 241]
[2 am


AYES


Aitken, Jonathan
Budgen, Nick


Alexander, Richard
Bulmer, Esmond


Amess, David
Burt, Alistair


Ancram, Michael
Carlile, Alexander (Montg'y)


Arnold, Tom
Carlisle, John (N Luton)


Ashby, David
Carlisle, Kenneth (Lincoln)


Aspinwall, Jack
Carttiss, Michael


Atkins, Rt Hon Sir H.
Channon, Rt Hon Paul


Atkins, Robert (South Ribble)
Chapman, Sydney


Atkinson, David (B'm'th E)
Chope, Christopher


Baker, Rt Hon K. (Mole Vall'y)
Churchill, W. S.


Baker, Nicholas (N Dorset)
Clark, Hon A. (Plym'th S'n)


Baldry, Anthony
Clark, Dr Michael (Rochford)


Banks, Robert (Harrogate)
Clarke, Rt Hon K. (Rushcliffe)


Batiste, Spencer
Cockeram, Eric


Bellingham, Henry
Colvin, Michael


Bendall, Vivian
Conway, Derek


Benyon, William
Coombs, Simon


Berry, Sir Anthony
Cope, John


Best, Keith
Couchman, James


Bevan, David Gilroy
Currie, Mrs Edwina


Biggs-Davison, Sir John
Dorrell, Stephen


Blaker, Rt Hon Sir Peter
Douglas-Hamilton, Lord J.


Bonsor, Sir Nicholas
Dover, Den


Boscawen, Hon Robert
Dunn, Robert


Bowden, A. (Brighton K'to'n)
Durant, Tony


Bowden, Gerald (Dulwich)
Edwards, Rt Hon N. (P'broke)


Boyson, Dr Rhodes
Evennett, David


Brandon-Bravo, Martin
Eyre, Sir Reginald


Bright, Graham
Fairbairn, Nicholas


Brinton, Tim
Fallon, Michael


Brittan, Rt Hon Leon
Farr, John


Brooke, Hon Peter
Favell, Anthony


Brown, M. (Brigg &amp; Cl'thpes)
Forman, Nigel


Browne, John
Forsyth, Michael (Stirling)


Bruinvels, Peter
Fox, Marcus


Buck, Sir Antony
Franks, Cecil





Freeman, Roger
Raison, Rt Hon Timothy


Gale, Roger
Rees, Rt Hon Peter (Dover)


Galley, Roy
Rhodes James, Robert


Gardiner, George (Reigate)
Robinson, Mark (N'port W)


Garel-Jones, Tristan
Roe, Mrs Marion


Goodhart, Sir Philip
Rossi, Sir Hugh


Good lad, Alastair
Rost, Peter


Gorst, John
Rowe, Andrew


Greenway, Harry
Rumbold, Mrs Angela


Gregory, Conal
Ryder, Richard


Griffiths, E. (B'y St Edm'ds)
Sainsbury, Hon Timothy


Griffiths, Peter (Portsm'th N)
Sayeed, Jonathan


Ground, Patrick
Shaw, Sir Michael (Scarb')


Grylls, Michael
Shelton, William (Streatham)


Hamilton, Hon A. (Epsom)
Shepherd, Colin (Hereford)


Hamilton, Neil (Tatton)
Shepherd, Richard (Aldridge)


Hampson, Dr Keith
Shersby, Michael


Hannam, John
Silvester, Fred


Harvey, Robert
Sims, Roger


Haselhurst, Alan
Skeet, T. H. H.


Hawkins, C. (High Peak)
Smith, Tim (Beaconsfield)


Hawkins, Sir Paul (SW N'folk)
Soames, Hon Nicholas


Hawksley, Warren
Speed, Keith


Hayes, J.
Speller, Tony


Hayward, Robert
Spencer, Derek


Heathcoat-Amory, David
Spicer, Michael (S Worcs)


Henderson, Barry
Squire, Robin


Hickmet, Richard
Stanbrook, Ivor


Hicks, Robert
Stanley, John


Higgins, Rt Hon Terence L.
Steen, Anthony


Hill, James
Stern, Michael


Hind, Kenneth
Stevens, Lewis (Nuneaton)


Hirst, Michael
Stevens, Martin (Fulham)


Hogg, Hon Douglas (Gr'th'm)
Stewart, Allan (Eastwood)


Holland, Sir Philip (Gedling)
Stewart, Andrew (Sherwood)


Holt, Richard
Stewart, Ian (N Hertf'dshire)


Hooson, Tom
Stokes, John


Hordern, Peter
Sumberg, David


Howarth, Alan (Stratf'd-on-A)
Tapsell, Peter


Howell, Rt Hon D. (G'ldford)
Taylor, Teddy (S'end E)


Howell, Ralph (N Norfolk)
Temple-Morris, Peter


Hubbard-Miles, Peter
Terlezki, Stefan


Hunt, John (Ravensbourne)
Thomas, Rt Hon Peter


Hunter, Andrew
Thompson, Donald (Calder V)


Hurd, Rt Hon Douglas
Thompson, Patrick (N'ich N)


Johnson-Smith, Sir Geoffrey
Thorne, Neil (Ilford S)


Jones, Gwilym (Cardiff N)
Thornton, Malcolm


Jones, Robert (W Herts)
Thurnham, Peter


Jopling, Rt Hon Michael
Townend, John (Bridlington)


Joseph, Rt Hon Sir Keith
Tracey, Richard


Key, Robert
Trotter, Neville


King, Roger (B'ham N'field)
Twinn, Dr Ian


King, Rt Hon Tom
van Straubenzee, Sir W.


Knight, Gregory (Derby N)
Vaughan, Sir Gerard


Knight, Mrs Jill (Edgbaston)
Viggers, Peter


Knowles, Michael
Waddington, David


Knox, David
Wakeham, Rt Hon John


Lamont, Norman
Walden, George


Lawler, Geoffrey
Waller, Gary


Leigh, Edward (Gainsbor'gh)
Wardle, C. (Bexhill)


Lennox-Boyd, Hon Mark
Watson, John


Lilley, Peter
Watts, John


Lloyd, Peter, (Fareham)
Wells, Bowen (Hertford)


Lyell, Nicholas
Wells, John (Maidstone)


McCurley, Mrs Anna
Wheeler, John


MacGregor, John
Whitfield, John


Major, John
Winterton, Mrs Ann


Mather, Carol
Winterton, Nicholas


Mawhinney, Dr Brian
Wolfson, Mark


Moore, John
Wood, Timothy


Morris, M. (N'hampton, S)
Yeo, Tim


Neubert, Michael



Page, John (Harrow W)
Tellers for the Ayes:


Pattie, Geoffrey
Mr. David Hunt and Mr. Ian Lang.


Powley, John





NOES


Alton, David
Beckett, Mrs Margaret


Archer, Rt Hon Peter
Beith, A. J.


Barron, Kevin
Benn, Tony






Bennett, A. (Dent'n &amp; Red'sh)
Lloyd, Tony (Stretford)


Boyes, Roland
Lofthouse, Geoffrey


Brown, Gordon (D'f'mline E)
McDonald, Dr Oonagh


Brown, N. (N'c'tle-u-Tyne E)
McGuire, Michael


Brown, Ron (E'burgh, Leith)
McKelvey, William


Bruce, Malcolm
McNamara, Kevin


Callaghan, Jim (Heyw'd &amp; M)
McTaggart, Robert


Canavan, Dennis
Marek, Dr John


Clarke, Thomas
Martin, Michael


Clay, Robert
Maxton, John


Cocks, Rt Hon M. (Bristol S.)
Meadowcroft, Michael


Cohen, Harry
Mikardo, Ian


Cook, Robin F. (Livingston)
Miller, Dr M. S. (E Kilbride)


Corbett, Robin
Mitchell, Austin (G't Grimsby)


Corbyn, Jeremy
Morris, Rt Hon A. (W'shawe)


Cowans, Harry
Nellist, David


Craigen, J. M.
Oakes, Rt Hon Gordon


Cunliffe, Lawrence
O'Brien, William


Davies, Rt Hon Denzil (L'lli)
O'Neill, Martin


Davis, Terry (B'ham, H'ge H'l)
Patchett, Terry


Deakins, Eric
Pavitt, Laurie


Dewar, Donald
Pike, Peter


Dixon, Donald
Prescott, John


Dormand, Jack
Redmond, M.


Dubs, Alfred
Richardson, Ms Jo


Duffy, A. E. P.
Roberts, Allan (Bootle)


Dunwoody, Hon Mrs G.
Robertson, George


Eastham, Ken
Rooker, J. W.


Evans, John (St. Helens N)
Ross, Ernest (Dundee W)


Fatchett, Derek
Rowlands, Ted


Field, Frank (Birkenhead)
Sedgemore, Brian


Fields, T. (L'pool Broad Gn)
Sheerman, Barry


Fisher, Mark
Sheldon, Rt Hon R.


Flannery, Martin
Short, Ms Clare (Ladywood)


Foster, Derek
Short, Mrs R.(W'hampt'n NE)


Foulkes, George
Silkin, Rt Hon J.


Fraser, J. (Norwood)
Skinner, Dennis


Freeson, Rt Hon Reginald
Smith, C.(Isl'ton S &amp; F'bury)


George, Bruce
Smith, Rt Hon J. (M'kl'ds E)


Golding, John
Soley, Clive


Gould, Bryan
Spearing, Nigel


Hamilton, James (M'well N)
Strang, Gavin


Harrison, Rt Hon Walter
Tinn, James


Hart, Rt Hon Dame Judith
Wallace, James


Haynes, Frank
Wardell, Gareth (Gower)


Holland, Stuart (Vauxhall)
Wareing, Robert


Hughes, Sean (Knowsley S)
Welsh, Michael


Hughes, Simon (Southwark)
Williams, Rt Hon A.


Janner, Hon Greville
Woodall, Alec


Kennedy, Charles



Kirkwood, Archibald
Tellers for the Noes:


Lewis, Terence (Worsley)
Mr. Norman Hogg and Mr. Allen McKay.


Litherland, Robert

Question accordingly agreed to.

Question put accordingly, That the Bill be now read a Second time:—

The House Divided: Ayes 218, Noes 121.

Division No. 242]
[2.27 am


AYES


Aitken, Jonathan
Berry, Sir Anthony


Alexander, Richard
Best, Keith


Amess, David
Bevan, David Gilroy


Ancram, Michael
Biggs-Davison, Sir John


Arnold, Tom
Blaker, Rt Hon Sir Peter


Ashby, David
Bonsor, Sir Nicholas


Aspinwall, Jack
Boscawen, Hon Robert


Atkins, Rt Hon Sir H.
Bowden, A. (Brighton K'to'n)


Atkins, Robert (South Ribble)
Bowden, Gerald (Dulwich)


Atkinson, David (B'm'th E)
Boyson, Dr Rhodes


Baker, Rt Hon K. (Mole Vall'y)
Brandon-Bravo, Martin


Baker, Nicholas (N Dorset)
Bright, Graham


Baldry, Anthony
Brinton, Tim


Banks, Robert (Harrogate)
Brittan, Rt Hon Leon


Batiste, Spencer
Brooke, Hon Peter


Bellingham, Henry
Brown, M. (Brigg &amp; Cl'thpes)


Bendall, Vivian
Browne, John


Benyon, William
Bruinvels, Peter





Buck, Sir Antony
Hunter, Andrew


Budgen, Nick
Hurd, Rt Hon Douglas


Bulmer, Esmond
Johnson-Smith, Sir Geoffrey


Burt, Alistair
Jones, Gwilym (Cardiff N)


Carlisle, John (N Luton)
Jones, Robert (W Herts)


Carlisle, Kenneth (Lincoln)
Jopling, Rt Hon Michael


Carttiss, Michael
Joseph, Rt Hon Sir Keith


Channon, Rt Hon Paul
Key, Robert


Chapman, Sydney
King, Roger (B'ham N'field)


Chope, Christopher
King, Rt Hon Tom


Churchill, W. S.
Knight, Gregory (Derby N)


Clark, Hon A. (Plym'th S'n)
Knight, Mrs Jill (Edgbaston)


Clark, Dr Michael (Rochford)
Knowles, Michael


Clarke, Rt Hon K. (Rushcliffe)
Knox, David


Cockeram, Eric
Lamont, Norman


Colvin, Michael
Lawler, Geoffrey


Conway, Derek
Leigh, Edward (Gainsbor'gh)


Coombs, Simon
Lennox-Boyd, Hon Mark


Cope, John
Lilley, Peter


Couchman, James
Lloyd, Peter, (Fareham)


Currie, Mrs Edwina
Lyell, Nicholas


Dorrell, Stephen
McCurley, Mrs Anna


Douglas-Hamilton, Lord J.
MacGregor, John


Dover, Den
Major, John


Dunn, Robert
Mather, Carol


Durant, Tony
Mawhinney, Dr Brian


Edwards, Rt Hon N. (P'broke)
Moore, John


Evennett, David
Morris, M. (N'hampton, S)


Eyre, Sir Reginald
Neubert, Michael


Fairbairn, Nicholas
Page, John (Harrow W)


Farr, John
Pattie, Geoffrey


Favell, Anthony
Powley, John


Forman, Nigel
Raison, Rt Hon Timothy


Forsyth, Michael (Stirling)
Rees, Rt Hon Peter (Dover)


Fox, Marcus
Robinson, Mark (N'port W)


Franks, Cecil
Roe, Mrs Marion


Fraser, Peter (Angus East)
Rossi, Sir Hugh


Freeman, Roger
Rost, Peter


Gale, Roger
Rowe, Andrew


Galley, Roy
Rumbold, Mrs Angela


Gardiner, George (Reigate)
Ryder, Richard


Garel-Jones, Tristan
Sainsbury, Hon Timothy


Goodhart, Sir Philip
Sayeed, Jonathan


Goodlad, Alastair
Shaw, Sir Michael (Scarb')


Gorst, John
Shelton, William (Streatham)


Greenway, Harry
Shepherd, Colin (Hereford)


Gregory, Conal
Shepherd, Richard (Aldridge)


Griffiths, E. (B'y St Edm'ds)
Shersby, Michael


Griffiths, Peter (Portsm'th N)
Silvester, Fred


Ground, Patrick
Sims, Roger


Grylls, Michael
Skeet, T. H. H.


Hamilton, Hon A. (Epsom)
Smith, Tim (Beaconsfield)


Hamilton, Neil (Tatton)
Soames, Hon Nicholas


Hampson, Dr Keith
Speed, Keith


Hannam, John
Speller, Tony


Harvey, Robert
Spencer, Derek


Haselhurst, Alan
Spicer, Michael (S Worcs)


Hawkins, C. (High Peak)
Squire, Robin


Hawkins, Sir Paul (SW N'folk)
Stanbrook, Ivor


Hawksley, Warren
Stanley, John


Hayes, J.
Steen, Anthony


Hayward, Robert
Stern, Michael


Heathcoat-Amory, David
Stevens, Lewis (Nuneaton)


Henderson, Barry
Stevens, Martin (Fulham)


Hickmet, Richard
Stewart, Allan (Eastwood)


Hicks, Robert
Stewart, Andrew (Sherwood)


Higgins, Rt Hon Terence L.
Stewart, Ian (N Hertf'dshire)


Hill, James
Stokes, John


Hind, Kenneth
Sumberg, David


Hirst, Michael
Tapsell, Peter


Hogg, Hon Douglas (Gr'th'm)
Taylor, Teddy (S'end E)


Holland, Sir Philip (Gedling)
Temple-Morris, Peter


Holt, Richard
Terlezki, Stefan


Hooson, Tom
Thomas, Rt Hon Peter


Hordern, Peter
Thompson, Donald (Calder V)


Howarth, Alan (Stratf'd-on-A)
Thompson, Patrick (N'ich N)


Howell, Rt Hon D. (G'ldford)
Thorne, Neil (llford S)


Howell, Ralph (N Norfolk)
Thornton, Malcolm


Hubbard-Miles, Peter
Thurnham, Peter


Hunt, John (Ravensbourne)
Townend, John (Bridlington)






Tracey, Richard
Wells, Bowen (Hertford)


Trotter, Neville
Wells, John (Maidstone)


Twinn, Dr Ian
Wheeler, John


van Straubenzee, Sir W.
Whitfield, John


Vaughan, Sir Gerard
Winterton, Mrs Ann


Viggers, Peter
Winterton, Nicholas


Waddington, David
Wolfson, Mark


Wakeham, Rt Hon John
Wood, Timothy


Walden, George
Yeo, Tim


Waller, Gary



Wardle, C. (Bexhill)
Tellers for the Ayes:


Watson, John
Mr. Ian Lang and Mr. David Hunt.


Watts, John





NOES


Alton, David
Kirkwood, Archibald


Archer, Rt Hon Peter
Leadbitter, Ted


Barron, Kevin
Leighton, Ronald


Beckett, Mrs Margaret
Lewis, Terence (Worsley)


Beith, A. J.
Litherland, Robert


Bell, Stuart
Lloyd, Tony (Stretford)


Benn, Tony
Lofthouse, Geoffrey


Bennett, A. (Dent'n &amp; Red'sh)
McDonald, Dr Oonagh


Bermingham, Gerald
McGuire, Michael


Boyes, Roland
McKelvey, William


Brown, Gordon (D'f'mline E)
McNamara, Kevin


Brown, N. (N'c'tle-u-Tyne E)
McTaggart, Robert


Brown, Ron (E'burgh, Leith)
Marek, Dr John


Bruce, Malcolm
Martin, Michael


Callaghan, Jim (Heyw'd &amp; M)
Maxton, John


Canavan, Dennis
Meadowcroft, Michael


Carlile, Alexander (Montg'y)
Michie, William


Clarke, Thomas
Mikardo, Ian


Clay, Robert
Miller, Dr M. S. (E Kilbride)


Cocks, Rt Hon M. (Bristol S.)
Morris, Rt Hon A. (W'shawe)


Cohen, Harry
Nellist, David


Cook, Robin F. (Livingston)
Oakes, Rt Hon Gordon


Corbett, Robin
O'Brien, William


Corbyn, Jeremy
O'Neill, Martin


Cowans, Harry
Parry, Robert


Craigen, J. M.
Patchett, Terry


Cunliffe, Lawrence
Pavitt, Laurie


Davies, Rt Hon Denzil (L'lli)
Pike, Peter


Davis, Terry (B'ham, H'ge H'l)
Prescott, John


Deakins, Eric
Randall, Stuart


Dewar, Donald
Redmond, M.


Dixon, Donald
Richardson, Ms Jo


Dormand, Jack
Roberts, Allan (Bootle)


Dubs, Alfred
Robertson, George


Duffy, A. E. P.
Rooker, J. W.


Dunwoody, Hon Mrs G.
Ross, Ernest (Dundee W)


Eastham, Ken
Rowlands, Ted


Evans, John (St. Helens N)
Sedgemore, Brian


Fatchett, Derek
Sheerman, Barry


Field, Frank (Birkenhead)
Sheldon, Rt Hon R.


Fields, T. (L'pool Broad Gn)
Short, Ms Clare (Ladywood)


Fisher, Mark
Short, Mrs H.(W'hampt'n NE)


Flannery, Martin
Silkin, Rt Hon J.


Foster, Derek
Skinner, Dennis


Foulkes, George
Smith, C.(Isl'ton S &amp; F'bury)


Fraser, J. (Norwood)
Smith, Rt Hon J. (M'kl'ds E)


Freeson, Rt Hon Reginald
Soley, Clive


George, Bruce
Spearing, Nigel


Godman, Dr Norman
Strang, Gavin


Golding, John
Thomas, Dr R. (Carmarthen)


Gould, Bryan
Tinn, James


Hamilton, James (M'well N)
Wallace, James


Harrison, Rt Hon Walter
Wardell, Gareth (Gower)


Hart, Rt Hon Dame Judith
Wareing, Robert


Haynes, Frank
Welsh, Michael


Hogg, N. (C'nauld &amp; Kilsyth)
Williams, Rt Hon A.


Holland, Stuart (Vauxhall)
Winnick, David


Hoyle, Douglas
Woodall, Alec


Hughes, Sean (Knowsley S)



Hughes, Simon (Southwark)
Tellers for the Noes:


Janner, Hon Greville
Mr. Austin Mitchell and Mr. Allen McKay.


Kennedy, Charles

Question accordingly agreed to.

Mr. Terry Davis: On a point of order, Mr. Deputy Speaker. I understand that it is possible under Standing Order No. 42 for us to have a brief explanatory statement from the Financial Secretary——

Mr. Deputy Speaker: Order. Perhaps the hon. Gentleman will wait until the motion has been moved.

Mr. Terry Davis: On a point of order, Mr. Deputy Speaker. I wish to clarify the procedure for the benefit of the House before the motion is moved. I should be grateful for your ruling. Under Standing Order No. 42 it is possible for the Financial Secretary to make a brief explanatory' statement on why clauses are to be taken on the Floor of the House. We should also like to make a brief explanatory statement about why certain other clauses should be added to the motion. We should be grateful if you would allow us to do that. Will you rule that that is in order?

Mr. Deputy Speaker: The hon. Gentleman should wait until the motion is moved and then seek to catch my eye. Committal motion—Mr. John Moore.

Mr. Moore: The motion has been ——

Mr. Andrew F. Bennett: On a point of order, Mr. Deputy Speaker. I understand that we are about to move to the committal motion and that normally it is agreed as a result of discussions between the usual channels. There is no procedure for amendments to be made other than by the mover of the motion. In view of the Government's behaviour tonight, I suspect that unanimity in the House may not exist about that motion. Since under the Standing Orders it is not possible to table manuscript amendments and we must either vote for or against the motion, surely it is reasonable——

Mr. Deputy Speaker: Order. I am governed by Standing Orders, as is the rest of the House. I am not able to vary Standing Orders according to the needs of hon. Members in a particular situation. I call Mr. John Moore.

Mr. Moore: The motion has been on the Order Paper since last Friday. It could have been amended De fore this——

Several Hon. Members: rose——

Mr. Deputy Speaker: Order. Hon. Members should allow the motion to be moved and then, in accordance with Standing Order No. 42, it is up to one hon. Member to catch my eye to give good reason for opposing the motion.

Mr. Andrew F. Bennett: Further to that point of order, Mr. Deputy Speaker. I was trying to establish that once the motion is moved it is not possible to amend it. If the House defeats the motion, the whole Bill will be considered in Committee. Since the terms of the motion are normally agreed through the usual channels, would it not be for the convenience of the House, to avoid the continuance——

Mr. Deputy Speaker: Order. I have ruled on this matter and the hon. Gentleman must accept my ruling. I do not know anything about the usual channels. Mr. John Moore.

Mr. Moore: As I was saying, Mr. Deputy Speaker, the motion has been on the Order Paper since last Friday and the clauses and schedule selected for consideration——

Mr. Bennett: On a point of order——

Mr. Deputy Speaker: Order. I hope that the hon. Gentleman does not want to raise a point of order on which I have already ruled.

Mr. Bennett: I do not wish to challenge your ruling, Mr. Deputy Speaker, but I suggest that you have the power to suspend the sitting, so that the usual channels may discuss the matter. I ask you to consider suspending the sitting for discussions to see whether the House is happy that a motion which cannot be amended should be proceeded with.

Mr. Deputy Speaker: I have no intention of suspending the sitting.

Finance Bill (No. 2) (Committal)

Motion made and Question proposed,

That Clauses 10, 17, 18, 20, 21, 27, 57, 98, 105, 113 and Schedules 6 to 8 and 12 be committed to a Committee of the whole House;

That the remainder of the Bill be committed to a Standing Committee;

That, when the provisions of the Bill considered, respectively, by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill be proceeded with as if the Bill had been reported as a whole to the House from the Standing Committee.—[Mr. Moore.]

Mr. Gerald Bermingham: On a point of order, Mr. Deputy Speaker. Those of us who have an interest in this matter would like to know what is being moved.

Mr. Deputy Speaker (Mr. Harold Walker): Order. I have proposed the Question to the House. It is the motion on the Order Paper.

Mr. Bermingham: Further to that point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker: I hope that the hon. Gentleman will not test the patience of the House with either the same point of order or a bogus point of order.

Mr. Bermingham: I would not wish to test your patience, Mr. Deputy Speaker. However, democracy would be best served if those of us trying to follow the proceedings of the House could hear what is being said. It may be a late hour, and some of us may be tired, but we have a right to hear what is said. If there is hubbub and noise, that denies us the right to hear what is being said. Therefore, it is right to raise a point of order so that we may hear what is being said.

Mr. Terry Davis: I wish to make a brief explanatory statement about why my right hon. and hon. Friends believe that some clauses that have not been included in the motion should be included. It is unfortunate that discussions through the usual channels have broken down, which is responsible for feelings running so high. I shall not comment further on that now but may wish to comment on it later on a point of order.
On the Motion relating to which clauses should be debated on the Floor of the House, I shall begin with clause 1. During our debates the hon. Member for Hereford (Mr. Shepherd) made a most telling point about the difference in taxation on a pint of cider compared with a pint of beer. I was impressed by that point. I have a personal interest in the matter because I live in the same county as the hon. Gentleman. He omitted to mention another important point. The clause also covers perry, which is made in Worcestershire. Therefore, the clause should be debated on the Floor of the House.
Clause 2 deals with tobacco products. It is important because it deals with the taxation levied on cigarettes. My hon. Friends and I have strong feelings—which we are sure are shared by Conservative Members—because we could not make our points in the Second Reading debate due to the closure motion. Clearly the Government did not want to discuss those points. We have strong views about the amount of tax that is imposed on cigarettes. That clause should be debated on the Floor and, as a major interest is


involved for the Department of Health and Social Security, we hope that the responsible Minister will take part in the debate.
Clause 3 deals with hydrocarbon oils. The increase in duty proposed by the Government will have an inflationary effect on costs to industry. Industry featured largely in our earlier debates, and would have formed a major part of my speech if I had had the opportunity to reply to the debate. I am sure that the Financial Secretary would also have wished to comment on that point. It is extremely important to industry, especially manufacturing industry, and we would like to explore the matter on the Floor of the House in a Committee of the whole House.
Vehicle excise duty is the subject of clause 4. This topic, too, was mentioned on Second Reading.

Dr. John Marek: rose——

Mr. Deputy Speaker: Order. interventions are not permitted under Standing Order No. 42.

Dr. Marek: On a point of order, Mr. Deputy Speaker. As a new Member, I am not very happy with the procedure. I am not challenging your ruling, Mr. Deputy Speaker, but I ask for your guidance on how my right hon. and hon. Friends and I can stop the slide from democracy into a Fascist state, which is evidenced by the guffaws, laughter and rejection of democracy that we have heard and seen from Conservative Members this evening.

Mr. Deputy Speaker: I have problems sometimes with our Standing Orders, but we have them and we must observe them. The debate is governed by Standing Order No. 42. As for the behaviour of hon. Members, I hope that the House will give the Opposition Front Bench spokesman, the hon. Member for Birmingham, Hodge Hill (Mr. Davis), the courtesy of a fair hearing.

Mr. Davis: rose——

Mr. Laurie Pavitt: On a point of order, Mr. Deputy Speaker. May I request my hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) through you, Mr. Deputy Speaker, to speak a little slower? I am having some difficulty following his arguments, because of the speed of his delivery.

Mr. Davis: I was trying to help the House, Mr. Deputy Speaker. There was an earlier complaint about my hon. Friend the Member for Great Grimsby (Mr. Mitchell), who spoke so passionately on Second Reading that he became rather carried away. I shall try to slow down, Mr. Deputy Speaker, but I shall have some difficulty doing so as I tend to speak rather quickly.
I was talking about clause 4, which deals with vehicle excise duty. The clause was referred to on Second Reading and was linked with clause 5, which will have an effect on the disabled. Important issues are raised by the clauses and we should like to discuss them on the Floor of the House.
I shall not discuss clauses 6 and 7 because the Opposition are agreed that it will be appropriate to discuss them in Standing Committee.
Clause 8 deals with free zones, which are an important part of the Government's economic policy. The Chief Secretary has told us that free zones have been considered previously by the House, but the Opposition wish to discuss the ins and outs of the clause, which is extremely important and which will have an effect on firms which set

up shop in the free zones and on those who remain outside them. The implications of the clause could be serious for the whole of British industry.
Clause 9 is very important because if it is implemented it will raise £1·2 billion by bringing forward receipt by the Government of revenue. Surely that must be discussed on the Floor of the House. We are sorry that that has not been included in the Government's motion.
Clause 10 is included in the motion and so I shall move on quickly from it. I shall not presume on your good will, Mr. Deputy Speaker, by talking about the effect of the Government's proposals on take-away food, which was discussed quite thoroughly on Second Reading. The same goes for the effect of their proposals on the building and construction industry. We are glad that the Government have acceded to our request that the clause should be debated on the Floor of the House.
Clause 11 is a technical part of the Bill that can be left to the Standing Committee, as can Clauses 12 and 13. Clauses 14, 15 and 16 form a miscellaneous chapter and it will be appropriate to consider them in Standing Committee. The Government have accepted that clauses 17 and 18 should be debated on the floor of the House, but we are disappointed that they have not planned to take clause 19 in the Chamber. It is an extremely important clause, as was demonstrated by the Chief Secretary when he opened the Second Reading debate. To be fair to the right hon. and learned Gentleman, his speech was lighter and more acceptable to my right hon. and hon. Friends than some of his previous contributions, but when he addressed himself to corporation tax he fell below the level of intellectual honesty which we have come to expect from the right hon. and learned Gentleman, and which we have seen demonstrated by him. He referred to the evidence given by the general secretary of the TUC to the Treasury and Civil Service Select Committee. He quoted Mr. Murray as saying that he would not argue with the need to reform the structure of corporation taxation. We believe that clause 19 should be debated on the Floor of the House because the Chief Secretary fell far below the intellectual honesty that we expect of him, and to prove that charge I will quote what the general secretary actually said to the Select Committee. At page 33 of the minutes of evidence of the Select Committee, we have Len Murray referring to the Chancellor's suggestion that the phasing out of capital allowances and a reduction in corporation tax would stimulate employment. That was the Chancellor's, not Len Murray's suggestion. Mr. Murray told the Select Committee:
Certainly we would not argue with the need to reform the structure of corporate taxation. There are a lot of nonsenses in the way in which it operates. But we do not see how these measures"—
the Government's measures—
will stimulate capital investment in the way he is implying. What we think they will do is penalise companies with very high levels of capital spending relative to profits; i.e. typically rapidly expanding firms. There will be a tendency for companies to distribute rather than plough back profits into investment, so our conclusion is that the Budget itself will do very little for output in itself and very little for jobs.
That is a complete passage from the minutes of evidence, as opposed to the selective quotation which the Chief Secretary gave.
I will not refer in greater detail to the other points that I would have made had the debate not been closured. We


believe that there is a good case against investment allowances, but not a case for abolishing them without replacing them with any other incentive to investment.
I come to some of the other provisions that we believe should be included. The Government have agreed to include clause 27, interest paid on deposits with banks. There is a case for saying that the debate on accommodation allowances and the expenditure of hon. Members, clause 28, should be taken on the Floor of the House so that the country may see what we are doing in discussing matters which affect our personal interest.
Similarly, important points are to be made on clause 30 in relation to the reduction in and abolition of reliefs for foreign earnings and emoluments. Many hon. Members, particularly those who represent coastal towns, will have received letters from constituents who earn their livelihood as, say, seamen and who have been receiving reliefs which will be ended by that cause, and therefore the debate should take place in public.
I will not go into all the clauses which, in our view, should be taken on the Floor of the House. The clauses which deal with share options and share incentive schemes, clauses 39 and 40, which give certain benefits to the highly paid, should be debated publicly, and the Government should not be afraid of taking those on the Floor of the House.
I have considerable sympathy with my hon. Friend the Member for Wrexham (Dr. Marek), who said he had difficulty in understanding our procedure. It is a long time since a Government moved the closure on a Finance Bill in the House——

Mr. Deputy Speaker: Order. I must remind the hon. Member of the terms of Standing Order No. 42:
Mr. Speaker after permitting, if he thinks fit, a brief explanatory statement from the Member who makes and from a Member who opposes the motion shall, without permitting any further debate, put the question thereon.
I hope that the hon. Member will make his remarks brief. He has been speaking for more than 10 minutes.

Mr. David Winnick: On a point of order, Mr. Deputy Speaker. My hon. Friend the Member for Birmingham, Hodge Hill (Mr. Davis) was denied the opportunity of speaking in the debate from the Opposition Front Bench due to the way in which the Government moved the closure. In those circumstances, and as undoubtedly — I am sure that no hon. Member will disagree with me on this—what is now being mentioned are matters of great importance which could not be dealt with earlier by my hon. Friend, it should——

Mr. Deputy Speaker: Order. I must act in accordance with the Standing Orders, in the same way as every hon. Member must. It is my job to see that the House observes the Standing Orders. They give Mr. Speaker, or the occupant of the Chair, the power, if he thinks fit, to permit a brief statement in opposition, not the speech that an hon. Member would have made on an earlier motion before the House. Let us now get on.

Mr. Davis: I accept your ruling, Mr. Deputy Speaker. I am trying to be brief. The Chief Secretary when opening the debate told the House that this was an exceptionally long Bill. The right hon. and learned Gentleman informed the House—this is within the memory of the Chair—

that this Bill differed from all previous Finance Bills. We now know what he meant—that he would close the debate. I must not allow myself to be distracted by my strong feelings on that point, Mr. Deputy Speaker. I shall restrict myself, as you have ruled, to a brief explanatory statement on why some clauses should be taken on the Floor of the House. We are very worried about the Government's behaviour this evening. We have been subjected to a break-down in discussion through the usual channels. [Interruption.] I cannot give way to interventions.
We do not wish to oppose the ending of stock relief, which is part of the Government's changes in corporation tax. We prefer to debate that matter by including clause 19. Similarly, we are happy that the clauses on furnished holiday lettings and taxation of woodlands should be discussed in Committee.
Chapter II deals with capital allowances. The Government propose to debate clause 57 alone, but we should like to press that clauses 57, 58, 59 and 60 be taken together because they are a package. [Interruption.] I am not sure whether the Chief Secretary is trying to intervene or merely conduct a conversation from a sedentary position. At least, he is with us, which is more than we can say for the Chancellor. It must be drawn to your attention, Mr. Deputy Speaker, and to the House generally, that the debate is occurring at this hour at the request of the Chancellor. The Opposition wished to arrange a debate through the usual channels-to be held at a more reasonable hour later this week. The debate is being held at this hour after the emergency debate.

Mr. Deputy Speaker: Order. The hon. Gentleman knows that he is straying from the matter before the House. He is also pushing his luck in respect of the point about which I reminded him earlier. His statement in opposition to the motion should be brief.

Mr. Davis: Thank you, Mr. Deputy Speaker. Clause 61 deals with capital gains tax. The Opposition regard that tax as very important. We are worried about the changes being made by the Government, and we should like to debate that matter at length on the Floor of the House, especially as we were unable to debate it earlier today.
During our earlier debate, a point was made about maintenance funds for historic buildings. Clause 66 should be discussed on the Floor of the House because it is linked with clause 10. The Government were claiming that clause 10 will adversely affect people engaged in maintaining British heritage. Yet, the Government propose to discuss clause 66, which deals with maintenance funds for the treatment of historic buildings, in the Standing Committee.
Clause 70 on the withdrawal of life assurance premium relief is extremely important, and we are worried that the Government do not want to deal with it on the Floor of the House. For many years, people wishing to save in that way could obtain tax relief on insurance premiums.

Mr. Deputy Speaker: Order. I remind the hon. Gentleman again that his remarks must be brief. He is making a long speech. I hope he will deal with his other points quickly in the next couple of minutes.

Mr. Winnick: On a point of order, Mr. Deputy Speaker. I spy strangers.

Notice being taken that strangers were present, MR. DEPUTY SPEAKER, pursuant to Standing Order No. 136 (Withdrawal of strangers from House), put forthwith the Question, That strangers do withdraw:—

The House divided: Ayes 7, Noes 217.

Division No. 243]
[3.4 am


AYES


Craigen, J. M.
Pike, Peter


Hoyle, Douglas



Martin, Michael
Tellers for the Ayes:


Mikardo, Ian
Mr. David Winnick and Mr. Tony Lloyd.


Parry, Robert



Pavitt, Laurie





NOES


Aitken, Jonathan
Evennett, David


Alexander, Richard
Eyre, Sir Reginald


Alton, David
Fairbairn, Nicholas


Amess, David
Farr, John


Ancram, Michael
Favell, Anthony


Arnold, Tom
Forman, Nigel


Ashby, David
Forsyth, Michael (Stirling)


Aspinwall, Jack
Fox, Marcus


Atkins, Rt Hon Sir H.
Franks, Cecil


Atkins, Robert (South Ribble)
Fraser, Peter (Angus East)


Atkinson, David (B'm'th E)
Freeman, Roger


Baker, Rt Hon K. (Mole Vall'y)
Gale, Roger


Baker, Nicholas (N Dorset)
Galley, Roy


Baldry, Anthony
Gardiner, George (Reigate)


Banks, Robert (Harrogate)
Goodhart, Sir Philip


Batiste, Spencer
Goodlad, Alastair


Beith, A. J.
Gorst, John


Bellingham, Henry
Greenway, Harry


Bendall, Vivian
Gregory, Conal


Benyon, William
Griffiths, E. (B'y St Edm'ds)


Berry, Sir Anthony
Griffiths, Peter (Portsm'th N)


Best, Keith
Ground, Patrick


Bevan, David Gilroy
Grylls, Michael


Biggs-Davison, Sir John
Hamilton, Neil (Tatton)


Blaker, Rt Hon Sir Peter
Hampson, Dr Keith


Bonsor, Sir Nicholas
Hannam, John


Boscawen, Hon Robert
Harvey, Robert


Bowden, A. (Brighton K'to'n)
Haselhurst, Alan


Bowden, Gerald (Dulwich)
Hawkins, C. (High Peak)


Boyson, Dr Rhodes
Hawkins, Sir Paul (SW N'folk)


Brandon-Bravo, Martin
Hawksley, Warren


Bright, Graham
Hayes, J.


Brinton, Tim
Hayward, Robert


Brittan, Rt Hon Leon
Heathcoat-Amory, David


Brooke, Hon Peter
Henderson, Barry


Brown, M. (Brigg &amp; Cl'thpes)
Hickmet, Richard


Browne, John
Hicks, Robert


Bruinvels, Peter
Higgins, Rt Hon Terence L.


Buck, Sir Antony
Hill, James


Budgen, Nick
Hind, Kenneth


Bulmer, Esmond
Hirst, Michael


Burt, Alistair
Hogg, Hon Douglas (Gr'th'm)


Carlile, Alexander (Montg'y)
Holland, Sir Philip (Gedling)


Carlisle, John (N Luton)
Holt, Richard


Carlisle, Kenneth (Lincoln)
Hooson, Tom


Channon, Rt Hon Paul
Hordern, Peter


Chapman, Sydney
Howarth, Alan (Stratf'd-on-A)


Chope, Christopher
Howell, Rt Hon D. (G'ldford)


Churchill, W. S.
Hubbard-Miles, Peter


Clark, Dr Michael (Rochford)
Hughes, Simon (Southwark)


Clarke, Rt Hon K. (Rushcliffe)
Hunt, David (Wirral)


Colvin, Michael
Hunt, John (Ravensbourne)


Conway, Derek
Hunter, Andrew


Coombs, Simon
Hurd, Rt Hon Douglas


Cope, John
Johnson-Smith, Sir Geoffrey


Couchman, James
Jones, Gwilym (Cardiff N)


Currie, Mrs Edwina
Jones, Robert (W Herts)


Dorrell, Stephen
Jopling, Rt Hon Michael


Douglas-Hamilton, Lord J.
Joseph, Rt Hon Sir Keith


Dunn, Robert
Key, Robert


Durant, Tony
King, Roger (B'ham N'field)


Edwards, Rt Hon N. (P'broke)
Kirkwood, Archibald





Knight, Gregory (Derby N)
Squire, Robin


Knight, Mrs Jill (Edgbaston)
Stanbrook, Ivor


Knowles, Michael
Stanley, John


Knox, David
Stern, Michael


Lamont, Norman
Stevens, Lewis (Nuneaton)


Lang, Ian
Stevens, Martin (Fulham)


Lawler, Geoffrey
Stewart, Allan (Eastwood)


Leigh, Edward (Gainsbor'gh)
Stewart, Andrew (Sherwood)


Lennox-Boyd, Hon Mark
Stewart, Ian (N Hertf'dshire)


Lilley, Peter
Stokes, John


Lloyd, Peter, (Fareham)
Sumberg, David


Lyell, Nicholas
Tapsell, Peter


McCurley, Mrs Anna
Taylor, Teddy (S'end E)


MacGregor, John
Temple-Morris, Peter


Major, John
Terlezki, Stefan


Mather, Carol
Thomas, Rt Hon Peter


Mawhinney, Dr Brian
Thompson, Donald (Calder V)


Meadowcroft, Michael
Thompson, Patrick (N'ich N)


Moore, John
Thorne, Neil (Ilford S)


Morris, M. (N'hampton, S)
Thornton, Malcolm


Neubert, Michael
Thurnham, Peter


Page, John (Harrow W)
Townend, John (Bridlington)


Pike, Peter
Tracey, Richard


Powley, John
Trotter, Neville


Raison, Rt Hon Timothy
Twinn, Dr Ian


Rees, Rt Hon Peter (Dover)
van Straubenzee, Sir W.


Robinson, Mark (N'port W)
Vaughan, Sir Gerard


Roe, Mrs Marion
Viggers, Peter


Rossi, Sir Hugh
Waddington, David


Rost, Peter
Wakeham, Rt Hon John


Rowe, Andrew
Walden, George


Rumbold, Mrs Angela
Waller, Gary


Ryder, Richard
Wardle, C. (Bexhill)


Sainsbury, Hon Timothy
Watson, John


Sayeed, Jonathan
Watts, John


Shaw, Sir Michael (Scarb')
Wells, Bowen (Hertford)


Shelton, William (Streatham)
Wells, John (Maidstone)


Shepherd, Colin (Hereford)
Wheeler, John


Shepherd, Richard (Aldridge)
Whitfield, John


Shersby, Michael
Winterton, Mrs Ann


Silvester, Fred
Winterton, Nicholas


Sims, Roger
Wolfson, Mark


Skeet, T. H. H.
Wood, Timothy


Smith, Tim (Beaconsfield)
Yeo, Tim


Soames, Hon Nicholas



Speed, Keith
Tellers for the Noes:


Speller, Tony
Mr. Tristan Garel-Jones and Mr. Archie Hamilton.


Spencer, Derek



Spicer, Michael (S Worcs)

Question accordingly negatived.

Mr. Terry Davis: rose——

Mr. Deputy Speaker: Order. I think I should remind the hon. Gentleman of the point that I put to him earlier. He should now be concluding his remarks.

Mr. Davis: I am in your hands, of course, Mr. Deputy Speaker. I was seeking to make a brief explanatory statement on why some clauses should be added to the motion. I have covered 69 clauses in just over 10 minutes. Of course, if you feel that I am taking too much time on each of those clauses, I must accept your ruling. I certainly do not want to lose your good will. I was explaining why I thought—[Interruption.] Oppositions have rights. The Conservative party fought the general election on a manifesto which stated that Parliament should control the Executive. I shall not discuss that point any further; I am simply making the point for the record that the Government have truncated discussion on the most important part of Parliament's business in a year — financial business and taxes. What has happened tonight is unprecedented since 1925. Naturally, feelings on the Opposition Benches run high, especially after the earlier breakdown in communications through the usual channels.
I was talking about clause 70, dealing with the withdrawal of life assurance premium relief. That form of relief has existed for over 100 years. The Government are seeking to take a very important step. It particularly affects small savers, because a life assurance policy is one of the first forms of saving to which people turn if they have disposable income.
We have been told in the debate that the clause is badly drafted and that the Government intend to table an amendment in Committee because they overlooked the effect on industrial life assurance policies—a specially important matter for small savers.

Mr. Deputy Speaker: Order. The hon. Gentleman must not start to make his case now on each future amendment. I remind him that he must bring his remarks to a close.

Mr. Davis: I was not seeking to explore the issues raised by the clause. I wished only to emphasise why we regard it as very important. But I am in your hands, Mr. Deputy Speaker, and, since you have specifically asked me to draw my remarks to a close, I accede to your request.

Question put and agreed to.

Ordered,
That Clauses 10, 17, 18, 20, 21, 27, 57, 98, 105, 113 and Schedules 6 to 8 and 12 be committed to a Committee of the whole House;
That the remainder of the Bill be committed to a Standing Committee;
That, when the provisions of the Bill considered, respectively, by the Committee of the whole House and by the Standing Committee have been reported to the House, the Bill be proceeded with as if the Bill had been reported as a whole to the House from the Standing Committee.

Scottish New Towns (Housing)

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Major.]

Mr. Norman Hogg: I have sought this Adjournment debate tonight in order to discuss the important issue of housing in Scottish new towns.
New towns have two vitally important functions—the attraction of industry and the provision of high quality housing. I want to deal tonight with the housing function.
It would be churlish of me not to place on record my appreciation—and, indeed, the appreciation of the new town of Cumbernauld—of the Minister's decision to go ahead with the building of new houses at Balloch 2A. Those houses were badly needed and it was the right decision to go ahead with the building programme.
However, the situation now emerging is very serious. The number of houses available to let is diminishing. Indeed, the answer to my parliamentary question on Monday 4 April showed that in 1979 Cumbernauld had 10,907 houses for rent, whereas five years later that figure has dropped to 9,547. The position in East Kilbride has also worsened, from 18,675 in 1979 to 16,077 in 1983. But my main concern is, of course, with Cumbernauld.
I am shocked by the fact that, five years after the Conservative Government came to power, there are 1,360 houses fewer for rent.
The causes are two-fold — the reduction in new building and the sales policy. Although the Minister was correct——

Mr. Robert Parry: May I tender to the House the apologies of my hon. Friend the Member for Liverpool, Garston (Mr. Loyden), who originally had the Adjournment debate. His wife was taken ill suddenly, and I hope that later, perhaps after the Easter recess, my hon. Friend can catch Mr. Speaker's eye on an Adjournment debate.

Mr. Hogg: I am grateful to my hon. Friend the Member for Liverpool, Riverside (Mr. Parry) for bringing to the attention of the House the fact that my hon. Friend the Member for Liverpool, Garston (Mr. Loyden) cannot be here because of family problems. We would all wish to be associated with the points made by my hon. Friend.
Although the Minister was correct to go ahead with building at Balloch 2A, more new houses for rent are needed because the second generation of new town citizens must be housed. Their needs can be met only by a policy of new building. One important point that cannot be overstated is that, with a diminishing stock of houses to rent, the letting policy of the development corporation must be seen to be fair, and must be open and subject to scrutiny. Above all, it must establish as its main priority letting on the basis of housing needs alone. There cannot and should not be other criteria.
The sales policy has existed for a long time in Scottish new towns in general, and in Cumbernauld. A policy that includes building for sale and for rent must be the right policy for Cumbernauld and other Scottish new towns. the essential factor is that we need new building funded by the public sector, because the private sector cannot meet our needs. Our young people do not have the cash with which to buy, and many people are unemployed. Even if we get


the promised economic upturn—we hear much about that but it has not materialised—it would not ease the immediate problem.
There has been much rehabilitation work in Scottish housing, and even in a new town that is only 27 or 28 years old rehabilitation programmes are required. Last week I met East Carbrain residents association in Cumbernauld, whose estate must be rehabilitated. It says little for new town planners of not so long ago that we already have such programmes, and the residents are not impressed by what has happened. They live in flats which few wish to rent and no one wishes to buy. the residents doubt whether anyone will wish to purchase the houses even after renovation, yet they must make way for a rehabilitation and sales policy. The people want a decent environment, fair play in decanting, and a general upgrading of the area. When I meet the development corporation next week I shall raise the points made to me by the residents association.
The Government's housing policy for new towns can be stated simply: first, they want private building, for which I accept there is a place; secondly, they want public building only for special needs, such as those of the elderly anti disabled; and, thirdly, they want the sale of public stock to continue. I submit that that does not add up to a housing policy which meets the needs of new town communities. We need a policy of building for let, for sale and for special needs.
In addition, the Scottish new towns must look to the future. There must be a merging of housing policy between the two housing authorities in every new town—the development corporation and the district council. In the long run, the districts will assume the powers of the development corporations in relation to housing and the housing stock will be managed by the district council. It will not happen very soon—I know of the Minister's plans in that regard—but it will happen some day and we should make a start on co-ordination of housing policy between the housing authorities in each new town. I am sure that that would be welcomed by all concerned. There are anomalies as between tenants of the different authorities which should be put right.
In addition, the time has come to strengthen tenants' rights in relation to security, repairs and improvements, access to files, exchanges and transfers, moves between local authority areas and rehousing rights on breakdown of marital relationships. We must encourage a more responsive and decentralised housing management and maintenance policy and promote tenant participation and democracy, including housing co-operatives. I appreciate that much of that applies to older areas as well as to new towns, but I believe that the problems should be tackled urgently.
I want the new towns to be good places in which to live, work and enjoy recreation, and an important aspect of that is housing. A housing policy that aims at good homes and real freedom of choice as between renting and owning is called for. A policy that recognises that tenants and owner-occupiers are equals in an equitable system would be a real social advance. I hope that the Minister can hold out some hope that such a policy will commend itself to the Government.

Mr. Donald Dewar: rose——

Mr. Deputy Speaker (Mr. Harold Walker): Does the hon. Gentleman have the consent of both the Minister and the hon. Member for Cumbernauld and Kilsyth (Mr. Hogg) to speak?

Mr. Dewar: I assure you, Mr. Deputy Speaker, that my hon. Friend for Cumbernauld and Kilsyth (Mr. Hogg) and the Minister are well aware that I intend to take just two minutes. I recognise, if I may say so, that even Deputy Speakers occasionally tire. As it is now 3.26 am. I shall not delay the House.
I congratulate my hon. Friend on his ingenuity in filling an unfortunate gap resulting from the unavoidable absence of another Member and securing this Adjournment debate. No one works harder than my hon. Friend for causes of new towns and his something of a byword for assiduousness and effectiveness in watching over the developments in this area.
The House may be relieved to hear that I do not think that this is the moment for a major discussion of new town policy, but I very much endorse my hon. Friend's comments about the coming together over a period—I accept that it will be a fairly long period — of the development corporation and the district council and a marrying of their housing responsibilities, with the district council eventually taking full responsibility.
It may be helpful if, in the time remaining to him in this short debate, the Minister would say something about the way in which he envisages the housing stock developing and about the guidance that he is giving—"instructions" is a fairer word, as we all know that in matters of rent and housing development policy the new town development corporations are very much subject to the instructions of the Scottish Office.
We are all familiar with the rhetoric of choice in housing. Like my hon. Friend, I am especially anxious that sufficient rented accommodation should be available in the new towns for those who wish to opt for that type of housing as distinct from exercising the equally legitimate but not necessarily more legitimate choice to buy.
As I understand it—perhaps the Minister will correct me if I am wrong — some of the new towns have received an instruction from the Scottish Office that housing for rent will not be built. The concentration, laudable in the sense that there is a shortage of special needs housing, will be in that area, but less laudable because it is in some danger of destroying the real choice to which I referred on building for immediate sale.
Will the Minister say a word or two about what he intends the new town development corporations to do in the next year or two? I recognise that he cannot anticipate future years to any great extent, but perhaps he will note our anxiety that there should be a proper balance and say a word or two about the funding of the housing programmes of the new towns. They have financial problems in exactly the same way as public sector housing in the local authorities is beset with problems. Will he also say a word about whether he will in future allow a little more discretion, particularly in the provision of housing for rent?

The Parliamentary Under-Secretary of State for Scotland (Mr. Allan Stewart): I join the hon. Member for Glasgow, Garscadden (Mr. Dewar) in congratulating the hon. Member for Cumbernauld and Kilsyth (Mr.


Hogg) on obtaining this debate. We are all sad to hear of the problems that have prevented the hon. Member for Liverpool, Garston (Mr. Loyden) from being here tonight.
The hon. Member for Cumbernauld and Kilsyth has made his customary well-informed speech on behalf of his constituents. This is an important topic for his constituents and those in other new towns because of the wider role of the new towns in Scotland. That is a role which most hon. Members would agree is changing. For example, Cumbernauld's role in providing a new environment for Glasgow's overspill is now largely historic. So there has been a change in the context in which housing policies in the new towns are formed.
Of course, the new towns in Scotland have a key role as focal points for industrial expansion and inward investment. They have been successful in attracting major expansions and important new investment. There is Motorola in East Kilbride, ACT in Glenrothes, SCI in Irvine, NEC and Shin-Etsu Handotali in Livingston, and Berkley Glasslab in Cumbernauld which the hon. Gentleman will know well.
Housing is important for the inhabitants of the new towns. It is important for ensuring that the new towns remain highly competitive in the tough business of attracting mobile new projects and the expansion of existing companies.
Both hon. Members who have spoken have asked about the trend of Government policy. That was set out by my right hon. Friend the Secretary of State for Scotland in his policy statement of September 1981. He emphasised that new house building in the new towns must be undertaken increasingly by the private sector, with the obvious exception, which the hon. Member for Garscadden mentioned, of special needs, for which new housing to rent would still need to be built by the development corporations.
In pursuit of that objective, the development corporations were asked for detailed proposals on how they could help the private sector to provide the housing required for the continued expansion of the new towns in addition to their particular defined role in the provision of public sector rented housing—a role which includes the management, maintenance and rehabilitation of their existing housing stock in addition to building houses for rent to meet special needs.
The policies have developed in what it is fair to describe as a continuing dialogue between the development corporations, my right hon. Friend and the Department. The policy towards new town housing reflects the Government's general priorities. Scotland has a low percentage of owner-occupied housing. Population trends are changing with the emerging crude surplus of houses over households.
Therefore, it is sensible to concentrate on encouraging public sector tenants to purchase their homes, as the Government did through the Tenants' Rights, Etc. (Scotland) Act 1980 in the previous Parliament and are doing in the Tenants' Rights, Etc. (Scotland) (Amendment) Bill, which is in another place. It makes sense to concentrate capital resources on improvements, meeting identified special needs and encouraging the private sector in joint ventures, particularly in low-cost home ownership.
Those are the general policies and the new town development corporations have responded positively to them.
The hon. Member for Cumbernauld and Kilsyth mentioned house sales and said that the policy had been less controversial in his constituency than in other, more reactionary parts of west central Scotland.
Since 1973, about 11,400 houses have been sold, including 7,500 since the Government came to power in 1979.

Mr. Dewar: I take it that the Minister is using the word "reactionary" in the sense that councils have properly reacted strongly against the distortions and difficulties that have followed implementation of part I of the tenants' rights Act.

Mr. Stewart: No. I used the word "reactionary" in its correct sense. There are parts of west central Scotland that have not brought themselves up to date and are still looking to past housing policies, but that attitude is changing because of the popularity of the Government's policy.
Housing sales have been an outstanding success in the new towns. Cumbernauld has an owner-occupation rate of about 36 per cent., including private new build. There is no doubt that that has brought benefits to consumers and existing tenants — the development corporations gain extra resources—and it has had a major effect on the environment. There is no doubt that those who buy their own houses have an incentive to improve them. Of course, that is no criticism of those who continue to rent.
The hon. Member for Cumbernauld and Kilsyth mentioned general needs new build housing and the effects of Government policy. We do not see a need for the development corporations to continue such building. I entirely agree with what the hon. Gentleman said about the need for renting policy to be fair and be seen to be fair.
The trend of policy in recent years, under successive Governments, has been steadily away from the building of substantial amounts of general needs housing—whether by development corporations or local authorities —because of changes in demand, household size and social trends.
There has been no sudden end to public sector general new build, because houses have been in the pipeline and the hon. Member for Cumbernauld and Kilsyth mentioned the Balloch 2A development, which the Government allowed to go ahead after strong representations from the hon. Gentleman and the development corporation.
General needs housing continues to become available through relets as people move into the private sector, away from the area or into special needs housing. I gave the House some figures on 27 October. There were 689 empty houses for letting in Scotland's new towns of which 185 had been empty for three months or more. A further 963 were also empty but in the process of coming back on to the market because, for example, they were being repaired.
I have mentioned the positive reaction of the development corporations to the Government's encouragement to advance measures to encourage private house building and home ownership in Scottish new towns. Various proposals are being discussed and brought forward under five main headings—joint ventures with private developers, joint ventures with individuals


building their own homes, measures to encourage sales of corporation houses, further measures to encourage private buyers, and building for shared ownership. Measures under those headings are being discussed with Cumbernauld and other development corporations.
The hon. Member for Garscadden asked about the eventual transfer to the district councils of the development corporation's housing function. The details are being considered by a working party that includes representatives of COSLA, the Department and the development corporations. Everyone recognises that the development corporations in Scotland have a continuing role in the next few years at least and it will therefore be some time before that transfer can occur.
Housing policy in Scotland's new towns is developing against a background of continuing changes in social

attitudes. It must respond to those changes, to population movements and to the needs of employers and potential employers. The Government will continue carefully to consider the representation's that are made by the hon. Member for Cumbernauld and Kilsyth and others about certain aspects of that policy, but I am in no doubt that the flexible and innovative policies that are being pursued, with the emphasis on home ownership that I have described—especially for the first-time buyer— are best suited to meet the challenges and opportunities that face Scotland's new towns.

Question put and agreed to.

Adjourned accordingly at eighteen minutes to Four o' clock.